solar energy and the problem of path...

Solar Energy and the Problem of Path Dependency

in Costa Rica’s Energy System

Universität Hamburg

Fakultät Wirtschaft und Sozialwissenschaften

Dissertation

zur Erlangung der Würde einer Doktorin der

Wirtschafts- und Sozialwissenschaften

„Dr. phil.“

(gemäß der PromO vom 24. August 2010)

vorgelegt von

Daniela García Sánchez

aus Costa Rica

Hamburg, den 30.07.2015

Erstgutachter: Prof. Dr. Wolfgang Hein

Zweigutachter: Prof. Dr. Detlef Nolte

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Acknowledgements

First of all, I would like to express my deepest gratitude to Prof. Wolfgang Hein, for his support

and advice. His guidance lead me to the concepts of path dependency and governance

approaches applied in political science, which became central to the present research. To my

second supervisor, Prof. Anita Engels, a special appreciation for including me in her

Dissertation Colloquium right from the beginning. My gratefulness to her and my colleagues in

the colloquium in which I gained many insights that guided my research and steered me towards

relevant literature on energy governance. I owe them my broader understanding of energy and

climate change from a sociological and integrated perspective.

I also wish to extend my thankfulness to the German Academic Exchange Service (DAAD),

which granted me a three and a half-year scholarship for my doctoral studies in Germany. I too

am indebted to the GIGA German Institute of Global and Area Studies, and the University of

Hamburg which offered me support during my research. I am especially grateful to Prof. Detlef

Nolte, Prof. Bert Hoffmann and Julia Kramer, who made sure I was provided with outstanding

research conditions and exchange opportunities with international researchers and European

networks. To all the researchers and fellow doctoral students, who commented on portions of

this thesis, at different stages, I want to especially acknowledge L. Holstenkamp, D. Vieira, A.

Schilling-Vacaflor, A. Flesken, M. Carpes, I. Rosales, M. Kirschlager, M. Fraundorfer, H. Kurz

and D. Avendaño for providing me with insightful comments on drafts of this manuscript.

I further would like to express my appreciation to ICE, CNFL, ACOPE and all the interviewees;

special thanks are due to S. Nandwani, R. Poveda and T. Fees for their valuable assistance. I

also wish to recognize the CINPE-UNA, which provided me with administrative support in

Costa Rica during the fieldwork. For the academic inspiration to initiate this PhD, I am

especially obliged to Prof. Edgar Fürst, who encouraged me to carry on a PhD project in

Germany. Thanks also to E. Ruano, A.Y. Chacón, and J. Jansen, who assisted with fieldwork

and data collection.

I am deeply thankful to my family and friends for all their support and encouragement,

especially Almut S.V., Isabel R., Daniele V., Anna V., Ana S., Miriam S, Jorge G., Martin O.,

Mariana C., Sol G., Sole G., Simone S., Medha and Ana N., my endless admiration and eternal

appreciativeness for the inspiration, advice, and support they provided at different stages of my

research, in addition to many joy filled moments. To my dear roommates and DAAD fellows,

Daisy and Denisse, endless thanks for their friendship and support from the very beginning.

Finally, I am truly grateful to my boyfriend Daniel for his unconditional love, trust and

enormous support in this journey. I also wish to extend my infinite gratitude to his family for

their support and positive vibes.

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Table of contents

Acknowledgements ................................................................................................................... i

List of Tables ...........................................................................................................................vi

List of Figures..........................................................................................................................vi

List of Graphs ..........................................................................................................................vi

List of Abbreviations ..............................................................................................................vii

Part I Introduction, State of the Art, Theoretical and Methodological Approaches .................. 2

1. Introduction ...................................................................................................................... 3

1.1 Research Puzzle, Aims and Questions ........................................................................ 3

1.2 The Argument and Hypotheses .................................................................................. 5

1.3 Reasons to Study Path Dependency in Costa Rica’s Energy System ........................... 8

1.4 Delimitation of the Study ......................................................................................... 10

1.5 Conceptual Clarification .......................................................................................... 11

1.6 Carbon Neutrality in Costa Rica’s Energy System .................................................... 15

2. State of the Art: Energy Transition towards Low Carbon Energy Systems ....................... 20

2.1 Introduction ............................................................................................................. 20

2.2 Global Energy Governance ...................................................................................... 20

2.2.1 Global Climate Change .................................................................................... 20

2.2.2 Global Energy Industry Development............................................................... 23

2.2.3 Global Environmental Governance ................................................................... 24

2.3 National Energy Governance ................................................................................... 27

2.3.1 Carbon Neutrality and 100% Renewable Energy Goals .................................... 27

2.3.2 Economic Growth and Social Development...................................................... 28

2.3.3 Reliable Electricity Services ............................................................................. 30

2.3.4 Technology Cost and Incentives ....................................................................... 31

2.4 The Role of Change Actors in Energy Transformations ............................................ 34

2.4.1 Institutional and Political Transformations and Actors Involved ....................... 34

2.4.2 Historical Integrated Perspectives ..................................................................... 36

2.5 Concluding Remarks ............................................................................................... 37

3 Theoretical Framework: Neoinstitutionalism and the Mechanism-Centered Approach ..... 40

3.1 Introduction ............................................................................................................. 40

3.2 Defining Path Dependency ...................................................................................... 40

3.2.1 Neoinstitutional Approaches of Path Dependency ............................................ 40

3.2.2 Elements of Path Dependency .......................................................................... 42

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3.2.3 Path Dependency as a Problem of Policy Outcome ........................................... 46

3.3 Efficiency, Political Power and Legitimation Mechanisms ....................................... 48

3.3.1 Efficiency Mechanisms .................................................................................... 49

3.3.2 Political Power Mechanisms ............................................................................ 50

3.3.3 Legitimation Mechanisms ................................................................................ 50

3.4 Elements of Path Breaking and “Imagined Futures” ................................................. 51

3.4.1 Governance at a National and Global Level ...................................................... 51

3.4.2 Future Expectations and imagined futures ........................................................ 55


4 Methodological Approach: Qualitative Within-Case Analysis .......................................... 59

4.1 Introduction ............................................................................................................. 59

4.2 Formulating Hypotheses .......................................................................................... 60

4.3 Combining Methods: Institutional Analysis and Process Tracing.............................. 62

4.3.1 Institutional Analysis Method........................................................................... 62

4.3.2 Process Tracing Method ................................................................................... 65

4.4 Data Collection and Analysis ................................................................................... 69

4.4.1 Historical Review ............................................................................................ 69

4.4.2 The Fieldwork Experience ............................................................................... 70

4.4.3 Data Analysis ................................................................................................... 73


Part II Historical Analyses of Decisions in the National Electricity System .......................... 76

5 From Green Republic to Carbon Neutral Nation: Technological and Institutional

Trajectories of Costa Rica’s Energy System ............................................................................ 77

5.1 Introduction ............................................................................................................. 77

5.2 Technological Trajectories in Electricity Production (1880-2010) ............................ 79

5.2.1 Overview: Available Energy Resources............................................................ 79

5.2.2 Foundation and Consolidation of the Hydroelectric Path .................................. 82

5.2.3 Emergence of Alternative Renewable Energy Sources ...................................... 85

5.3 Institutional Trajectories in Electricity Production (1880-2010) ................................ 93

5.3.1 The “Green Republic” of Costa Rica ................................................................ 93

5.3.2 Steps towards a Carbon Neutral Nation .......................................................... 103

5.4 Concluding Remarks ............................................................................................. 117

6 Efficiency Mechanisms in the National Electricity System............................................. 121

6.1 Introduction ........................................................................................................... 121

6.2 Actors Involved and their Interests in the Decision-Making Processes .................... 122

6.3 Individual Accounts and Efficiency Mechanisms ................................................... 124

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6.3.1 Drivers of Coordination Effects ...................................................................... 124

6.3.2 Drivers of Learning Effects ............................................................................ 130

6.3.3 Drivers of Scale Economies ........................................................................... 132

6.4 Systemic Accounts and Efficiency Mechanisms ..................................................... 136

6.4.1 Drivers of Global Climate Change Effects ...................................................... 136

6.4.2 Drivers of National Welfare Effects ............................................................... 138

6.4.3 Drivers of Reliable Electricity Effects ............................................................ 141


7 Political Power Mechanisms in the National Electricity System ..................................... 145

7.1 Introduction ........................................................................................................... 145

7.2 Actors Involved and their Interests in Decision Making Processes .......................... 145

7.3 Systemic Accounts and Changes in the Power Game.............................................. 147

7.3.1 Empowerment of Private Investors ................................................................. 147

7.3.2 Community Empowerment ............................................................................ 157


8 Legitimation Mechanisms in the National Electricity System ......................................... 168

8.1 Introduction ........................................................................................................... 168

8.2 Actors Involved and their Interests in in Decision Making Processes ...................... 169

8.3 Systemic Accounts and Legitimation Mechanisms ................................................. 170

8.3.1 Global Climate Change Communication......................................................... 170

8.3.2 Communication of National Welfare .............................................................. 172

8.3.3 Communication of Local Welfare .................................................................. 178


Part III Integrated Discussion and Concluding Remarks .................................................... 184

9 Path Dependency and Path Breaking in the Costa Rican Energy System towards Carbon

Neutrality 2021 ..................................................................................................................... 185

9.1 Introduction ........................................................................................................... 185

9.2 Level of Analysis, Actors Interactions and Scenarios of Carbon Neutrality ............ 187

9.3 Elements of Path Dependency ................................................................................ 190

9.3.1 Path Dependency from Efficiency Mechanisms .............................................. 191

9.3.2 Path Dependency from Political Power Mechanisms ...................................... 195

9.3.3 Path Dependency Elements from Legitimation Mechanisms ........................... 197

9.4 Elements of Path Breaking ..................................................................................... 200

9.4.1 Path Breaking from Efficiency Mechanisms ................................................... 201

9.4.2 Path Breaking Elements from Political Power Mechanisms ............................ 206

9.4.3 Path Breaking from Legitimation Mechanisms ............................................... 209

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10 Conclusions ............................................................................................................... 214

10.1 Main Research Results........................................................................................... 214

10.2 Theoretical and Policy Implications ....................................................................... 222

10.3 Implications for Future Research ........................................................................... 226

11 Bibliography ............................................................................................................. 228

12 Annex ....................................................................................................................... 249

12.1 Abstract in German and English............................................................................. 249

12.2 List of Publications Related to this Dissertation ..................................................... 252

12.3 Interviewees Data .................................................................................................. 252

12.4 List of Events for Participatory Observation ........................................................... 256

12.5 Questionnaire for Interviews .................................................................................. 257

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List of Tables

Table 1. Electricity production per energy source in world regions .......................................... 23

Table 2. Answers and gaps from literature ............................................................................... 37

Table 3. Main elements of path dependency and causal regimes .............................................. 46

Table 4. Energy potential from different local sources ............................................................. 79

Table 5. Water use in Central America .................................................................................... 80

Table 6. Photovoltaic systems installed by the ICE .................................................................. 90

Table 7. Characteristics of existent plants over 1 MW and total installed capacity by Energy

source and year of operation. ................................................................................................. 119

Table 8. Actors’ interests and logics of decision .................................................................... 188

List of Figures

Figure 1. Actor-centered institutionalism approach .................................................................. 63

Figure 2. The model of explaining outcome process tracing..................................................... 66

Figure 3. Overview of the methodological framework ............................................................. 75

Figure 4. Institutional and technological trajectories in Costa Rica’s electricity sector ............. 78

Figure 5. Structure and regulation of the electricity sector ..................................................... 104

Figure 6. Map of Costa Rica and electricity generation projects (a selection) ......................... 120

Figure 7. Efficiency mechanisms and drivers......................................................................... 121

Figure 8. Political power mechanisms and drivers ................................................................. 145

Figure 9. Efficiency mechanisms and drivers......................................................................... 168

Figure 10. Mechanisms and drivers reinforcing or reversing the hydroelectric path ................ 186

Figure 11. Yearly and daily scenarios of electricity generation, 2012 and 2021 ...................... 205

Figure 12. Schematic view of centralized vs. distributed electricity generation ...................... 208

Figure 13. Mechanisms and drivers reinforcing or reversing the hydroelectric path ................ 214

List of Graphs

Graph 1. Costa Rica: Electricity production from different sources (% of total) ....................... 86

Graph 2. Public and private electricity projects in the national energy system (NES) ............. 148

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List of Abbreviations

ACESOLAR Costa Rican Solar Energy Association

ACOPE Costa Rican Association of Private energy Producers

ARE Alternative Renewable Energy

ARESEP Public Service Regulation Authority

BOT Build Operate Transfer

BUN-CA Energy Network Foundation

CABEI Central American Bank for Economic Integration

CAFTA Central American Free Trade Agreement

CDM Clean Development Mechanism

CICR Industrial Chamber of Costa Rica

CM Causal Mechanism

CNFL National Company of Energy and Lighting

DEG Distributed Electricity Generation

DSE Energy Sector Directorate

EEG German Renewable Energy Act

EIAs Environmental Impact Assessment

ESPH Public Service Company of Heredia

EUISS European Union Institute for Security Studies

FINE Research Project Financing Solutions for Innovation and

Sustainable Development in the Energy Sector

FECON Costa Rican Ecologist Foundation

FIT Feed in Tariff

GDP Gross Domestic Product

GEF Global Environmental Facility

GHG Green House Gases

GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit

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GW Giga Watt

GWP Global Water Partnership

HP Hydroelectric Plant

IAEA International Atomic Energy Agency

ICE Costa Rican Electricity Institute

ICOLD International Commission on Large Dams

IDB Inter-American Development Bank

IEA International Energy Agency

IFI International Financial Institution

ILO International Labor Organization

INTECO Technical Norms Institute of Costa Rica

IMF International Monetary Fund

IPCC Intergovernmental Panel on Climate Change

IPP Independent Power Producer

JI Joint Implementation

LAWEA Latin American Wind Energy Association

LNG Liquid Natural Gas

MER Regional Electricity Market

MIDEPLAN Ministry of Planning

MINAE Ministry of Environment and energy

ML Libertarian Movement Party

MREC Ministry of Foreign Relations

MW Mega Watt

NES National Electric System

NGO Non-Governmental Organization

NIS National Interconnected System

OLADE Latin American Energy Organization

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OCIC Joint Implementation Office of Costa Rica

PAC Citizen Action Party

PES Payment for Ecosystem Services

PLN National Liberation Party

PUSC Social Christian Unity Party

PV Photovoltaic Technology

RECOPE Costa Rican Oil Refinery

REN21 Renewable Energy Policy Network for the 21st Century

REP Rural Electrification Program

ROR Run-of-River

SETENA National Environmental Technical Secretariat

SHS Solar Home System

SIEPAC Central American Energy Interconnection System

SINAC National Conservation Areas System

SNE National Electricity Service

UCCAEP Costa Rican Union of Private Enterprise Chambers and

Associations

UNDESA United Nations Department of Economic and Social Affairs

UNFCC United Nations Framework Convention on Climate Change

UNDP United Nations Development Program

WBGU German Advisory Council on Climate Change

WB World Bank

WCD World Commission on Dams

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Part I Introduction, State of the Art, Theoretical and

Methodological Approaches

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1. Introduction

1.1 Research Puzzle, Aims and Questions

In March 2011, a few days after a major earthquake hit Japan compromising several reactors at

the Fukushima nuclear electricity plant, U.S. former vice president, environmental activist, and

Nobel Peace Prize winner, Al Gore visited Costa Rica calling the country “a hero among

nations” for its efforts to achieve carbon neutrality by 2021, stating that more nations need to

rely on wind and solar energy, including Costa Rica. Indeed, Costa Rica’s energy model with

nearly 90% of its electricity generated from renewable sources, mostly hydro-produced,

includes only subsidiary alternative renewable sources such as solar and biomass-driven energy.

In fact, a contradiction emerged four years earlier, when the country announced its carbon

neutrality goals in December 2007. This commitment coincided with natural constraints and

legitimation problems affecting hydroelectricity production, as it had been vulnerable to

periodical changing weather patterns over the last decade. Consequently, electricity production

from oil-fueled plants increased, thus driving electrical energy prices upwardly. In 2013, the

political campaign, at the time, prompted reactions from politicians showing their support to

further advance and prioritize the construction of larger hydroelectric projects. Additionally, it

was the first time that they began considering natural gas as a prospect; nonetheless, no political

attention whatsoever was given to alternative renewable energy sources, for example, solar

energy.

Energy governance scholars and politicians, worldwide, have turned their attention to the study

of energy transitions directed towards low carbon and renewable energy goals. Empirical

evidence shows that in the development of energy systems, radical change is not the norm.

Technologies that become conventional begin to dominate despite increasing the perception of

problems and limitations, whereas non-conventional renewable sources have repeatedly been

considered unsuccessful and having no future within energy systems. Why does this happen

and how can it be explained?

My dissertation addresses those inquiries by asking why Costa Rica chose to have limited

utilization of alternative renewable sources, above all solar energy, to achieve the carbon

neutrality goal in a context of declining hydroelectricity contribution, while (expensive and

polluting) fossil fuels such as petrol and natural gas gained relevance in future scenarios.

Throughout my research I discovered that, in spite of a changing context, Costa Rica’s energy

system exhibits symptoms of rigidity or decay as result of policy decisions reinforced over time.

Hence, beyond technical and economic aspects, I contend that the causes can be attributed to a

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problem of path dependency, a concept used to explain the dual nature of institutions, their

dynamism as well as their permanency.

The research´s questioning arises from an empirical impasse in the transformation of Costa

Rica’s energy system, as well as a literature gap to approaching low carbon energy goals from

an integrated perspective to the provision of sound policy advice in small developing countries.

Literature concerning energy transition towards low carbon and renewable energy systems has

been exploring determinants from three different angles: global energy governance; national

energy governance; and the role of agents of change. These energy goals are, generally,

analyzed from developed or emerging countries’ perspective and financial institutions focusing

on single factors, mainly the economic drivers of energy decisions. Meanwhile, less

consideration is given to the standpoints of “small states”, their particular conditions and

unfolding patterns over time in the renewable energy field; especially in Latin America.

Furthermore, within these debates, a more limited group of works has been dealing with

historical analyses and contradicting interests, power relations and values in energy decisions.

Whereas, the work of scholars, like Vargas (2002) and Jiménez (2009), researching energy

transition in Costa Rica refers to political and institutional inertia tending to benefit

conventional energy sources, none of the authors has directly approached institutional

stabilization and change in order to develop historical (theoretical) explanations. Henceforth, the

objective of my research is twofold: the first pertains to empirical policy problems and the

second refers to theory.

On the one hand, the rationale is linked to policy problems and political interests in order to best

comprehend the case and conditions under which the carbon neutral goal can be accomplished

by means of sustainable strategies. The Costa Rican electricity sector is an intriguing case of

policy outcome, in itself, because of its apparent fixation of technological patterns in Costa Rica

in contrast with energy institutions that, occasionally, in the past have been more purposive and

efficient. An example of such behavior is when the country pioneered the introduction of new

technologies, such as geothermal and wind energy, to the national energy system.

On the other hand, the theoretical purpose of this investigation is to provide a better

understanding of the causal mechanisms that explain technology development, stabilization and

change in political and institutional frameworks. The research, hereby, focuses on existing

theoretical approaches of path dependency and institutional entrepreneurs, combined with other

elements of governance, at national and global level, based on the works of Hall & Taylor

(1996) and Mahoney (2000), furthered by neoinstitutional scholars, such as Pierson (2004),

Garud and Karnøe (2003), Meyer & Schubert (2007). Subsequently, I gather drivers of path

dependency in efficiency, political power and legitimation mechanisms.

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Anchored on those three mechanisms of path dependency, I found six efficiency drivers that

produce a path dependence on hydroelectricity. These drivers are: a) learning effects, b)

cooperation effects, c) economies of scale, operating at an individual level; d) climate change

effects, e) reliable electricity effects, and f) national welfare effects at a macro (systemic) level.

Moreover, I found that their effects are enhanced by two more drivers derived from political

power and legitimation mechanisms, respectively: g) empowerment of private investors, and h)

national welfare communication.

Conversely, there are three drivers of path breaking by which patterns marked by path

dependency might be reversed. They are resultant from efficiency, legitimation and political

power mechanisms, respectively: i) the uncertainty of decisions arising from external climatic

shocks that reduce hydroelectricity production, ii) local welfare communications from

electricity developments and ii) community empowerment derived from socio-environmental

clashes. These processes counteract drivers, to some extent, that had reinforced hydroelectricity

over time. The aforementioned mechanisms and drivers are part of the empirical findings,

widely expounded, in part II of this study.

The methodology, used for this research, is based on a within-case analysis of a mechanism-

centered investigation that seeks to respond to the question initially formulated. In this regard,

the research strategy is outlined without generalizing the broader population of cases. I refer,

chiefly, to the electricity subsector in Costa Rica, which has been the focus of national political

attention to foster energy transformations. Solar energy is considered, herein, as a reference of a

renewable option, technically applicable and feasible (by its climate) in Costa Rica, but the least

used among all alternatives.

The procedure followed is an inductive-deductive approach that is guided by methods of

institutional analysis and process tracing. Accordingly, 47 interviews were conducted with

different groups of actors, in the energy field, which were complemented with written policy

documents and participatory observations for the process-tracing analysis. Other secondary

sources include scholarly works on Costa Rica’s environmental history, social movements in the

electricity sector and market reforms that were useful to expand on the institutional analysis and

the observations for the period prior to 1990.

1.2 The Argument and Hypotheses

In spite of the country’s ever-changing contexts, Costa Rica’s long-standing institutions, in the

electricity sector, became stable in a situation of inertia. This stability was reinforced through

decision-making processes that resulted in the preeminence of hydroelectricity installations,

6

while limiting the subsequent ability to further implement policies that incorporate solar energy,

wind parks, and other alternative renewable sources to achieve carbon neutrality and 100%

renewable energy use. This statement will be the subject of analysis in the present investigation.

In doing so, I resort to the procedure proposed by Van Evera (1997) to test possible

explanations. It begins by inferring predictions and developing hypotheses for the monitored

phenomenon and then probing if they are confirmed or unconfirmed by evidence. The research

questions and hypotheses, formulated in this thesis, are highly specific to the case, which is also

backed by academic empirical research on energy.

So as to keep track of what is expected, solar energy shall be used as an example among

restrained alternative renewable carriers. Until 2011, electricity generating installations from

solar energy remained outside the National Energy System accounts. Overall, solar energy was

relegated from main developments; with the exception of rural electrification projects, using

micro and small solar home systems (SHS), and private initiatives of small businesses in a niche

market. It was not until the first solar energy park reaching 1 MW (i.e. 0.04% of the total NES)

launched operations, in 2012, that solar energy was substantiated on the sector’s statistics.

An intuitive explanation of this phenomenon is linked to the natural conditions and the

abundance of water resources to produce electricity. Although, the country uses about 25%

installed capacity of the total identified potential of hydroelectricity, its availability has

limitations. Meanwhile, from the theoretical potential of solar energy in the country, Costa Rica

only employs less than 1% of its estimated potential.

Another argument is associated to the costs or higher relative prices and strong dependence on

imported components of alternative technologies. Nevertheless, this statement juxtaposes with

historical evidence stating that prices are not necessarily the only factor contributing to change.

At times, when oil prices have reached very low levels, such as in the 1990s, Costa Rica stayed

true to its model largely based on renewable sources. Conversely, on those occasions when oil

prices were high, the country also continued relying on fossil-fueled thermal plants to back

hydroelectricity. In the case of solar energy, although cost and efficiency aspects have

drastically improved since 2008, particularly manufacturing rates of the photovoltaic

technology, the cost of the electricity it generates continues to be considered high.

The above situation also points to other elements of inertia created by actors’ decisions, such as

vested interests, fixed assets, as well as sunken costs created by capital intensive installations

and large investments that are difficult to reverse. Furthermore, the Costa Rican electricity

sector is not a market regime, but rather a mixed model under state control. The country has a

long history of institutional development based on the “autonomous institutions” figure, such as

7

the Costa Rican Electricity Institute (ICE), who also became a political actor over the years.

Under these circumstances, which are not considered market conditions, prices are not the sole

factor influencing energy decisions, especially in “the world of political institutions” (Pierson,

1996: 141).

Two questions emerge from the historical analyses: (1) why was there no significant support, in

the past, for the active incorporation of solar energy within the Costa Rican energy system,

while technologies like geothermal energy and wind parks did gain relevant attention?; and (2)

why has there recently been an increasing, but limited, interest in solar energy and how is it

translated into policies transforming the national energy system to supplement other sources

towards reaching 100 percent renewable electricity generation and carbon neutrality by 2021;

while, at the same time, expensive and polluting fossil fuels such as petrol and natural gas

gained relevance in future scenarios? In this respect, the following indicators shall be taken into

account:

a) Different actor accounts

b) Different periods of time

c) Different technologies

d) Additional indicators: technology-related costs, global and national discourses or policy

statements, and natural conditions or climatic events.

In order to find answers to the research questions, theory shall also be factored in. According to

path dependency theory, self-reinforcing mechanisms are the main figure to distinguish path-

dependent phenomena from those that are not. Therefore, competing explanations of

institutional status or change in the national energy sector according to different mechanisms

that can underpin processes on institutional reproduction shall be clearly outlined. Accordingly,

three (causal) hypotheses shall be formulated:

- Hypothesis one: Comparing technologies, choices are based on the cheapest and most

efficient option available according to actors’ cost-benefit assessments that are either driven

by individual profit motivations (individual level) or systemic goals (macro level).

- Hypothesis two: Technological developments are supported by elite groups that benefit

from existing arrangements in spite of claims from (subordinated) groups of actors that

prefer the expansion of alternative energy installations.

- Hypothesis three: Actors believe that certain technologies are appropriate and morally just

for the provision of electricity.

Although, I consider those hypotheses as competing explanations, it is possible that their long

term effect is rather complementary. Each hypothesis is related to theoretical concepts of

8

efficiency, political power, and legitimation, respectively. Hypotheses and theory are used to

elaborate a theory-guided analysis of causal mechanisms and the specification of how they

operate. Section 1.5 clarifies the theoretical concepts that provide the data analysis.

1.3 Reasons to Study Path Dependency in Costa Rica’s Energy System

Primarily, the purpose of this research is to explain the decision making processes regarding

alternative renewable energy sources, for instance solar energy, and conventional ones, such as

hydroelectricity and fossil fuel sources. Thus, those explanations are relevant to draw inferences

that are useful for policy-making in the country. Moreover, without generalizing, this study

contributes in closing the research gaps that derive from works that analyze energy transitions

towards low carbon and renewable energy systems in comparison to similar queries affecting

other countries in Latin America or other regions.

Concerning the first contribution to scholarship research, understanding the specific case is also

intriguing, over and beyond the timing relevance for policy-making. In spite of being an

unlikely candidate, Costa Rica has become a leader in renewable energy use for electricity

production (Wilde-Ramsing & Potter, 2008). However, the country’s commitment to carbon

neutrality by the year 2021 and the new paradigm of civil society participation in the regulation

of the electricity sector, place the country at a turning point (Carazo, 2001; Cartagena, 2010;

ARESEP 2014).

In relation to the second contribution, although energy governance literature has extensively

studied energy-related challenges of access, climate change, economic and social development

(Dubash and Florini, 2011; Flüeler et al, 2012), there is relatively little written about 1) why do

countries engage in low carbon and renewable energy goals; 2) why do some energy options

dominate while others are relegated; and 3) how do aspects of political power and legitimation

influence energy decisions. The present research contributes to close some gaps within these

areas.

First, the study of renewable energy governance is just emerging (Hein et al 2011). In

approaching the different types of renewable energy sources, literature within the field has

evolved from the general consideration of renewable energies without distinctions, to

differentiating hydro from non-hydropower sources (Meisen and Krumpel, 2009). More

recently, attention towards a broader fragmentation between non-hydro renewable energy

sources increases challenges regarding energy governance (Flüeler et al, 2012; Doner, 2007).

Second, I found a regional research gap, since in many cases the focus is on regional powers

and emerging economies (e.g. Brazil, India, China) confronting global energy challenges

9

(WBGU, 2011; IEA, 2012). Therefore, a bias is present when answering the above mentioned

questions from the standpoints of “small states”, such as those in Central America. For instance,

energy governance literature, on a national and global level, regards climate change as the main

factor of energy transformation in the last two decades (Newell 2011; Hein et al 2011).

Nevertheless, based on my analyses for the case of Costa Rica, I found that the motivation

concerning energy decisions might be different since, in this case, it mostly concerns climate

change consequences over reliable electricity effects, rather than legitimation of actions against

global climate change itself.

Third, I observed a disciplinary gap as academic empirical research, regarding energy, falls

short of explaining the preeminence of conventional energy above other alternatives, despite an

increasing perception of problems and limitations from the former. One reasoning that is

commonly discussed by this literature is technology costs and the lack of incentives or insight

towards other technologies, as opposed to established subsidies for conventional sources (Beck

and Martinot, 2004; Doner, 2007; OLADE, 2007; IEA, 2011; REN21, 2011). In the case of

most Latin American countries that have an abundance of resources, such as oil, gas, or hydro,

it is generally easier, cheaper and technically more feasible to keep exploiting conventional

energy resources rather than to invest in renewable energies or create appropriate renewable

energy policies (Meisen and Krumpel 2009; IEA, 2011).

This empirical observation is vital and important; however, political economy scholars (i.e. the

role of change agents) recognize that the emergence of a new techno-organizational path cannot

be explained by referring to single factors or single models (Pachauri and Spreng, 2012;

Schienstock 2007). Conversely, understanding potential ‘sustainable energy’ transformations

require placing attention towards many tricky issues in social theory related with agency and

structure, as well as the interplay of power, contingency, and practice (Stirling, 2014). Still,

there are very few studies that allow understanding the contradicting interests, value, and power

relations concerning energy decisions, and are especially unavailable in Latin America.

My choice analyses of Costa Rica’s energy system render evident that hydroelectricity is

reinforced through actors’ decisions through time. The motivations, however, were not only

aimed at lower-cost technology, but mostly systemic efficiency accounts, supported by political

power and legitimation processes. To some extent, the same factors that contribute to the

preeminence of hydroelectricity facilities also restrain alternative renewable energy use.

On this same issue, the last gap highlighted is methodological. A less prevalent amount of

bibliography deals with historical analyses of conditions and patterns unfolding over time and

restraining renewable energies (Meyer & Schubert 2007; Jørgensen 2012). Most studies have

limitations explaining policy gaps because they typically look for synchronic determinants of

10

policies, or snapshots of current conditions, for example, in current social interest or in existing

political alliances (Pierson, 1996). Meanwhile, a historical approach emphasizes the importance

of initial decisions and choices of venues and, introduces notions such as that of path

dependency.

In the case of Costa Rica, evidence of path dependency was found in the presence of self-

reinforcing mechanisms of dams and fossil-fueled plants as back up systems. They continued to

prevail, among the various options, in spite of legitimation problems of hydroelectricity derived

from the communication of local welfare, the political power interaction that triggers

community empowerment and the uncertainty in decisions from external climatic shocks. All

these mechanisms might reverse or contend the ongoing reproduction of the hydroelectric path,

possibly creating a new path of alternative renewable sources, although it is not likely to occur

by the year 2021.

1.4 Delimitation of the Study

The basis of my research statements can be summarized as follows. Firstly, this is a qualitative

study of the technological and institutional patterns developed along different energy sources in

the electricity production history of Costa Rica and in its transition towards carbon neutrality in

2021. Therefore, the analyses focus on the unique qualities of the case, different to case studies

that reflect upon a larger population.

Secondly, the present dissertation, by implementing an integrated approach, reconstructs the

country’s electricity trajectory from the perspective of relevant actors on a national scale. In

order to convene the most diverse viewpoints, the actor constellations included: (a) a

representation from the Energy Planning Sector who formulate policies and guidelines, (b) state

investors, (3) private investors with national and/or foreign capital, (4) civil society

organizations, including environmental organizations, producers/users associations, chambers

and international cooperation, as well as (5) politicians. Additional experts and media

standpoints are comprised. The analyzed policies include electricity production at utility or

company level. Conversely, the perception of electricity consumers or consumers producing

their own energy for self-consumption (i.e. on-site generation) is left aside.

Thirdly, the technological and institutional patterns to be explained were developed through a

long-term history of Costa Rica’s energy system. The analysis period begins with the origins of

electrification within the country, dating back to the nineteenth century and culminating in the

first decades of the twenty-first century, when carbon neutrality commitments were launched.

The institutional transformation that occurred during the 1990s, which coincided with the

11

liberalization reforms of the national electricity sector, stands out within this time framework.

Hence, the historical analyses were clustered into periods of observations, divided into three

segments: (1) technological and institutional conditions before 1990; (2) transformations during

1990-2014, and (3) energy policies and forecasts to achieve 100 percent renewable electricity

generation and carbon neutrality goals by 2021.

Fourthly, this study gathers the alternatives between energy sources for electricity generation

covering the whole spectrum of renewables in Costa Rica (i.e. hydroelectricity, wind parks,

geothermal energy, biomass electricity stations, and solar energy). Fossil fuel sources, such as

bunker or natural gas, or other alternative energy sources, such as nuclear energy, were included

as references in a few passages. The reason behind this is that, from the perspective of all

possible targeting sectors, the electricity subsector is the one that presents the closest technical

possibilities to actually becoming carbon neutral, given the fact that nearly 90% of the

electricity generated is currently with renewable sources.

Finally, in this research, the mechanism-centered approach considered places special attention

on institutional mechanisms in order to analyze the relationship between actors and institutions.

Institutional mechanisms are dealing with how certain intersubjectively present institutions

channel actors unintentionally in a certain direction (Parsons, 2007). Accordingly, the analytical

level of explanation is at the meso level, considering both situational (i.e. macro-micro) and

transformational (i.e. micro-macro) mechanisms (Beach and Pedersen, 2012; Parsons, 2007).

Without neglecting their potential influence, psychological and cognitive aspects are not

included in the present study.

1.5 Conceptual Clarification

Path Dependency: Definitions and Elements

Path dependency is broadly defined, within neoinstitutionalism, as a phenomenon of limited

change where reproduction of initial institutional or policy decisions, even suboptimal ones,

prevail over transformation (Liebowitz & Margolis, 1995; Pierson, 1996). Therefore, the

concept helps to explain how the evolution of rules and policies, along with social adaptations,

create and increase structured polity that restricts the options available to all political actors

(Pierson, 1996). In this sense, path dependency is the actors’ constraint that emphasizes the

influence of structure on outcomes.

At the same time, the concept of path creation stresses the role of agency in the stabilization of

an institutional or technological path. Path creation was incorporated in the theory of path

processes by Garud & Karnøe (2001; 2003) and further developed by Meyer & Schubert (2007)

12

in order to expand the scope of emergent events allowing for elements of strategic change.

Concepts related to path creation include vested interests, fixed assets, and sunken costs.

Therefore, according to path dependency and path creation, the quasi-irreversibility of

institutional or technological developments is not only based on investments but also on

interests.

Among the constitutive elements of path dependency or path creation, the ones that stand out

are: agency, structure, critical juncture, and self-reinforcing mechanisms. Despite differences on

emphasis, most scholars suggest a better understanding of their conceptualization and

relationship by looking at different phases of path development, distinguishing “genesis”,

“emergence and diffusion”, “reproduction”, and “stability” (e.g. Mahoney 2000; Meyer &

Schubert 2007; Sydow et al 2009; Sydow & Schreyögg 2013). Each phase has different causal

regimes that evolve in a progressive logic of becoming locked into a path and eventually of un-

locking processes. They are briefly sketched below highlighting their elements and definitions.

Phases of path development

Genesis- the Role of Agency

Agency, as either individual or collective action, is highlighted in the first phase of path

dependency and it can be characterized as an open decision-making situation when several

alternatives are possible. According to Giddens (1984), an agent is one who exerts power or

produces an effect. Thus, power is not the intention, but rather the ability of getting things done.

Nevertheless, this initial phase is neither of completely unrestricted choice (i.e. rational choice

theory), nor of determinacy (i.e. historical institutionalism). Rather, it is one of decisions

embedded and connected with other developments and imprints from the past. In this phase,

agents’ decisions are contingent (i.e. their outcomes are unforeseeable consequences of

purposeful action), though not random.

Emergence and Diffusion – the Relevance of Critical Junctures

A critical juncture marks the division between the genesis and the emergence phase and path

diffusion, also called path creation or formation phase. A critical juncture is a moment of

substantial institutional change or a ‘branching point’ from which historical development moves

onto a new institutional formation and developmental pathways (Thelen, 1999; Hall & Taylor,

1996). Hence, increasing selectivity begins in this phase and contingent or mindful choices are

made, triggering self-reinforcing dynamics. As long as decisions are made, the number of

alternatives is reduced, and choices, while still possible, are essentially constrained.

Reproduction - the Dynamics of Self-Reinforcing Mechanisms

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During this third phase, there is further restriction to the scope of action. Decisions are led by

mechanisms of self-reinforcing dynamics that may end up in a stage of stagnation or a lock-in.

Self-reinforcing mechanisms are regarded a main feature of path dependency, defined as

processes, patterns, or routines that develop dynamics on their own, rendering the whole process

increasingly irreversible (Sydow et al 2009: 691; Sydow & Schreyögg 2013; Mahoney 2000).

Self-reinforcing mechanisms exhibit increasing benefits with its continued adoption, different to

reactive sequences of events or similar patterns describing merely institutionalization,

institutional persistence, imprinting, or structural inertia.

Stability – the Influence of Structure and the Process of Structuration

Institutional reproduction processes, which result from self-reinforcing dynamics, eventually

were stabilized or institutionalized in a third phase that characterizes path dependency and lock-

in situations. At this stage, a specific trajectory of development is situated in a state of rigidity,

inertia, or decay that is difficult to reverse, hence it is path dependent. From this stage onwards,

self-reinforcing mechanisms build a regular pattern or routines which are to be expected. In

other words, this stage of path dependency emphasizes the influence of structure on outcomes.

The structural conception highlights people’s actions as rational reactions to exogenously given

structures in their environment (i.e. the material surrounding) that dictate behavior or create a

pattern of structural constraints and incentives (Parsons, 2007). This structure obliges the states

(or other relevant actor) to think of an increased revision of existing arrangements. Nonetheless,

agency is also present for locking-in a path. Here, authors base their analysis on Giddens’

conceptual framework of structuration (Giddens 1979; 1984).

Path Breaking – Reversing Self-Reinforcing Mechanisms

Eventually, the lock-in situation may change through dynamics of path breaking, giving birth to

a new phase of path termination or un-locked stage. Path breaking or un-locking is characterized

by stopping or interrupting self-reinforcing processes, changing the focus towards institutional

change. Therefore, there is again an open situation to a variety of options that increases

selectivity by actors; possibly creating a new path. Forms of governance at national and global

level, as well as notions of institutional entrepreneurs and future expectations take on particular

relevance in a path breaking phase.

Self-reinforcing mechanisms

When responding as to how self-reinforcement occurs and in what form, I consider Hall &

Taylor (1996) and Mahoney (2000), whose broad formulation of mechanisms are differentiated

14

among the calculus approach, the cultural approach, and the asymmetries of power.1

Accordingly, the present study groups self-reinforcing mechanisms in three forms: efficiency

mechanisms, legitimation mechanisms and political power mechanisms.

Efficiency Mechanisms

Efficiency mechanisms are derived from the calculus approach affecting individual or

institutional actions by altering expectations of an actor regarding the actions of others. From

this perspective, individuals are ‘utility maximizers’ and strategic interaction clearly plays a key

role. In this category of mechanisms, one could also integrate Mahoney’s (2000) functional

mechanisms of systemic reproduction. Therefore, according to efficiency explanations, an

institution is reproduced through the rational cost-benefit assessments of actors or it is justified

as functional for an overall system. Institutional change may occur when it is no longer in the

self-interest of actors to reproduce a given institution or because an exogenous shock transforms

systemic (or the system’s) needs.

Political Power Mechanisms

According to political power mechanisms, an institution is reproduced because it is supported

by an elite group of actors that benefit from the existing arrangement, even when most

individuals or groups prefer changing it. The self-reinforcing processes might operate when the

institution initially empowers a certain group at the expenses of other groups. The favored group

then uses its additional power to expand the institution even further, which, in turn, increases

the power of the advantaged group, and so forth. Inherently, conflicting processes of institutions

may eventually give way to institutional change, in which case there is a weakening of the elites

and a strengthening of subordinated groups.

Legitimation Mechanisms

The legitimation mechanism stresses individuals’ routines or familiar patterns of behavior. Self-

reinforcing mechanisms from legitimation operate when an institution is reproduced because

actors believe it is morally just or appropriate, although this institution may be less consistent

with the values of actors than previously available alternatives. Institutional forces of

legitimation include rational myths; a knowledge which is legitimated through the educational

system and by the professions, public opinion, and the respective laws (Powell, 2007).

Institutional transformation is, thus, positioned with changes within the values and moral codes

concerning what is considered appropriate, rationalized myths, declines in institutional efficacy

or stability, or the introduction of new ideas on behalf of political leaders.

1 Mahoney (2000; 2006) has attempted to categorize four possible forms of mechanisms of reproduction:

Utilitarian, Functional, Power, and Legitimation.

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Governance at national and global level

Governance is broadly defined as the joint contribution of public goods by state and non-state

actors (EUISS, 2010). Forms of governance are central to this research, since governance

impacts institutions’ and actors’ decisions (Pierson 1996; Börzel & Risse 2010). On a national

level, institutionalization processes not only concern the state. Within the constellation of actors,

this research focuses on institutional entrepreneurs. DiMaggio (1998) introduces the role of

institutional entrepreneurs who are actors that have interests in institutional change, but rarely

possess the resources, power, and legitimization necessary to implement their program.

For this reason, the institutionalization of their “entrepreneurial project” usually requires the

assent of various groups and the use of strategies to enlist support and defuse resistance.

Therefore, institutional entrepreneur actions and strategies may also take the form of

mechanisms applied to path dependency and path breaking approaches (e.g. efficiency, political

power and legitimation). In addition, expectations may also enter into the strategies also linked

to efficiency mechanisms (i.e. rational expectations model), or political power and legitimation

(i.e. fictional expectations) (Beckert 2014).

On a worldwide scale, the global governance discourse stresses the growing importance of

multi-actor constellations in inter- and transnational politics in different processes of norm

building, mainly through international cooperation (Hein & Kohlmorgen 2007). With a focus on

global governance, international practices include multilateral agreements and other governance

functions in steering, such as information-sharing, capacity building and implementation, and

rule-setting (Andonova, Betsill & Bulkeley, 2009). Therefore, the concept of global governance

helps to understand how norms originate, travel, or circulate, as well as the role of the different

actors involved. This approach fits in with legitimation mechanisms studying the influences of

global norms further discussed in the next Chapter of this section.

1.6 Carbon Neutrality in Costa Rica’s Energy System

Costa Rica’s natural conditions, together with a long history of institutional development dating

back to the early 1900s, provided the material and ideological foundations for the consolidation

of the national hydroelectricity-based energy system. Alternative, renewable energy sources

were not introduced until the mid-1990s, but their penetration remained limited due to technical

considerations by the energy planning sector. By the year 2009, the world’s three nations

committed to carbon neutrality were the Maldives by 2020, Costa Rica by 2021 and Norway by

2030 (Merchant, 2009).

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The small electricity market in the Maldives (with a population of 310,000) completely relies on

oil sources, while Costa Rica and Norway have a head start, because they already generate

almost all of their electricity from renewable sources, mainly hydroelectricity. In 2010,

electricity supply in Costa Rica was divided among hydroelectricity (76.4%), fossil-fueled fired

plants (6.7%), geothermal energy (12.4%), wind parks (3.8%), and biomass (0.7%) (DSE,

2011a). Due to its marginal share, solar energy technologies, including solar thermal and

photovoltaic plants, are not present within the data.

This particular case is noticeable because Costa Rica is not a wealthy, industrialized country

with the necessary amount of resources to invest in capital intensive renewables. Moreover, it

has a small energy market, but it does not rely completely on hydroelectricity. Besides, the

electricity sector is commanded by a state-owned firm, which in developing countries are

considered inefficient and risk adverse; and despite the fact that the country has proven oil

reserves, it has refused this kind of investment (Wilde-Ramsing and Potter, 2008).

In spite of being an unlikely candidate, the nation has become a leader in renewable energy use

for electricity production. The 2007 proclamation of the carbon neutrality goal to be achieved

by the year 2021, was launched together with the “Peace with Nature Initiative”, seeking to

“strengthen political actions and commitments to reverse the alarming trends of human impacts

over ecosystems at global, national, and local level” (MREC, 2008: 12).

The 21st century, however, began with an increasingly growing gap in the national renewable

energy system of electricity production. Installed capacity of fossil plants grew rapidly, while

the use of alternative renewable sources remained limited. In the case of Costa Rica’s energy

system, the main challenges pertained to the most extended conventional renewable energy

source for electricity production, which is hydroelectricity.

In fact, the country’s announcement of the carbon neutrality goal coincided with natural

constraints affecting hydroelectricity, mainly changing weather patterns. Sector institutions,

with a long-standing engagement in energy planning, responded accordingly by implementing

fossil- fueled electricity stations to back-up hydroelectricity. As a result, electricity production

from oil plants increased during the following years, thus hiking electricity prices and moving

away from carbon neutrality goals.

Despite the advantages provided by fossil-fueled thermal plants, as peak hour plants and as a

back-up to hydroelectricity, they are associated with several negative impacts. Besides

increasing the cost of electricity and the cost of exceeding capacity (i.e. by not using full

capacity), fossil fuels also complicate electricity price regulation, as they are based on

international fluctuations of oil and gas prices. The use of fossil fuels also has a negative effect

17

on the trade balance. Not to mention pollution and CO2 emissions to the atmosphere, especially

from bunker fueled plants used in the country.

Evidence of a progressive exhaustion of Costa Rica’s energy model is not only in terms of

renewable energy responses, but also in addressing the new paradigm of civil society

participation in decision and production processes. Although approximately 25% of the national

hydroelectric potential of 6500 MW is being exploited, nearly 16% of the remaining potential is

actually located in natural protected areas where the law excludes other commercial activities

besides tourism. Another 25% of the potential would directly or indirectly affect indigenous

territories, protected by the national Indigenous Law where these interventions in the

environment meet heavy resistance (Carls & Hafar, 2010; ICE, 2014: PEG; Weigl, 2014).

In addition, new hydroelectricity installations, from large dams to smaller run-of-the river

(RORs) hydroelectric plants, have been suffering problems of legitimacy. In many cases, fierce

opposition on behalf of environmental organizations and indigenous groups was also

accompanied by cases of dispute with local communities and other grass-root organizations.

The aspects that produced the greatest resistance to these projects were community

displacement; as in the case of large dams, environmental consequences on water streaming and

ecology, and the negative outcomes on other benefits that a river provide to the local economy,

or so called socio-environmental impacts (Cartagena, 2010).

Within the political and economic context, Costa Rica is included among the oldest

consolidated uninterrupted democracies since the 1950s, a rarity in Latin America (O’Donnell et

al, 2004). The political model is defined in terms of “participative democracy” or “socially

inclusive capitalist development” often termed “social democratic” or “mixed model”; a

characterization that relates to with a widespread perception of the country itself (Martin, 2004;

Hoffman, 2007). 2

One of the characteristics of this model is the provision of greater democratic

control on environmental resource allocation and economic development, for example, through

public and non-profit organizations (Martin, 2004).

Nevertheless, this model also found limitations visibly manifested on local demands of citizen’s

participation, information, and consultation mechanisms to control hydroelectric projects

(Carazo, 2001; Cartagena, 2010). In many cases, such claims propose to limit private electricity

generation, stating that electricity is a public service and a state duty, hence, the public

companies, and the rural cooperatives (Cartagena, 2010). The Regulatory Authority for Public

Services (Autoridad Reguladora de Servicios Públicos, ARESEP) has recognized the need to

introduce changes in the regulation of the electricity sector, since “the main challenge facing

2 Participative democracy is broadly defined as the inclusion of diverse perspectives in the policy-making

process (Prugh, Costanza & Daily, 2000 cited in Martin, 2004).

18

electricity services is the integration of community participation within decisions on a local and

national level” (ARESEP, 2014).

Thus, Costa Rica’s transition towards carbon neutrality illustrates the tensions between past and

future electricity configurations, shaped by both technological and institutional developments.

The research question initially formulated is emerging from this scenario. In my research, I

found that Costa Rica’s energy system exhibits features of rigidity or decay, as result of policy

decisions reinforced, over time, in spite of a changing context.

1.7. The Thesis’ structure

This thesis explores energy decisions in Costa Rica’s transition towards carbon neutrality in

2021. The focus lies on the mechanisms leading to technological choices producing inertia or

institutional change. Before investigating these processes, the thesis begins with part I that

consists of four chapters including this introduction (Chapter 1). Chapter 2 provides a review of

the literature relevant to the topic of energy transition towards low carbon and renewable energy

systems.

Chapter 3 presents the theoretical framework that begins by an overview of neoinstitutionalism

and the mechanism-centered approach. Subsequently, it goes into more detail by defining path

dependency, its elements, and progressive logic. This chapter includes a section that defines

specific claims from efficiency, political power, and legitimation mechanisms. Finally, it ends

with theoretical perspectives of institutional change from concepts of governance discourses, at

national and global level, and elements of path breaking theories. Chapter 4 consists of the

methodological approach and explains the procedures, methods, and data collection techniques

used in the qualitative analyses of the case.

After these preliminary considerations, the thesis proceeds with part II dealing with the

empirical findings separated into four chapters. Chapter 5 elaborates on how technological and

institutional patterns evolved in the country together with economic, social and environmental

context conditions. Chapters 6, 7 and 8 analyze the decisions’ mechanisms and drivers in the

energy field. Each chapter scrutinizes the mechanisms separately and compares energy

decisions by actors, periods of time, and by technology. Chapter 6 focuses on efficiency

mechanisms. Chapter 7 looks at the political power mechanisms, and Chapter 8 shows the

process of legitimation mechanisms.

Thereafter, the analyses move on to part III, which comprises two chapters. Chapter 9 offers an

integrated discussion on the findings regarding the three mechanisms, which evidenced the

presence of eight path dependency drivers producing institutional inertia and three main

elements of path breaking driving institutional change in the national energy system. Chapter

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10, the last chapter, conveys the conclusions of the study. It begins with a discussion on the

relevance of the within-case study to the literature on energy transition. This is followed by

theoretical and policy implications. Ultimately, it concludes with avenues for future research

related to similar puzzling conditions in Central America or other regions.

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2. State of the Art: Energy Transition towards Low Carbon Energy Systems

2.1 Introduction

This chapter provides an overview of the literature that analyzes energy transition towards low

carbon and renewable energy. It begins with an outline of the main drivers of energy transition

from the perspective of global energy governance, which are: global climate change, global

energy industry development, and global environmental governance. Thereafter, it shortly

discusses the main goals of energy systems with a focus on national energy governance.

Successively, it presents key studies which have dealt with examining the role of change agents

and historical integrated perspectives of transformations in the energy field.

Considering the main arguments from different standpoints, this chapter also aims to identify

scholarly answers to the following questions: (1) why do countries engage in low carbon and

renewable energy goals; (2) why do some energy options dominate while others are relegated;

and (3) how do aspects of legitimation influence energy decisions. The chapter focuses on

common sources of renewable energy, such as hydroelectricity, geothermal stations, wind

turbines, solar energy, and some forms of biomass. These are derived from natural processes

(e.g. sunlight and wind) that are replenished, at a faster rate, than they are consumed.3

2.2 Global Energy Governance

Energy governance, similar to climate governance, is identified and conceptualized as a multi-

actor, multi-level and multi-challenged governance (Dubash & Florini, 2011; Hein, García &

Holstenkamp, 2011). Global governance scholars frame energy related challenges in the arenas

of energy access and security; climate change and other environmental impacts; economic and

social development (Dubash & Florini, 2011; Flüeler, Goldblatt, Minsch & Spreng, 2012).

Overall, these challenges lie behind countries on their road to energy transitions.

2.2.1 Global Climate Change

According to Dubash & Florini (2011) among the energy-related challenges mentioned above,

climate change and its correlated risks are outlined as the main factors having a stronger

influence over the shifting global energy landscape within the last two decades. Hein, et al

(2011) conclude that the emerging renewable energy governance on a global level is linked to

both, environmental governance and climate governance, since the latter, and particularly the

3 There is an ongoing debate on the legal inclusion of nuclear energy among renewable sources,

especially since a distinction is made between conventional nuclear fission and the nuclear fission

involving fast neutron reactors (World Nuclear Association, 2014).

21

mitigation of greenhouse gas (GHG) emissions, is closely connected to energy concerns.

Foremost, as pointed out by Bradford (2006), renewable energy sources (e.g. solar energy, wind

turbines, hydroelectricity) are considered solutions for the increasingly acknowledged climate

change.

Precisely, the decarbonization of energy systems describes the historical trend initiated since the

Rio Earth Summit, in 1992, which moves away from carbon-rich energy sources, such as

traditional biomass (e. g. wood and coal), towards less carbon-intensive energy carriers (e.g. oil

and gas), and, increasingly, zero-carbon energy carriers such as renewable energies (WBGU,

2011; 2004). In this commitment, special attention was given to the target of limiting the

average increase of global surface temperature to 2o C above the pre-industrial levels in order to

prevent ‘dangerous’ climate change (WBGU, 2011; Geden & Beck, 2014). For the institutions

created in the run-up of the Rio conference, including scientific advisory bodies, such as the

German Advisory Council on Global Change (Wissenschaftlicher Beirat Der Bundesregierung

Globale Umweltveränderungen, WBGU), this objective was used as a guard rail to calculate

and stipulate that the concentration of greenhouse gases in the atmosphere must be permanently

stabilized below 450 ppm CO2eq (WBGU, 2007).4

The 2o C target provided a broadly applicable formula for climate change commitments of the

United Nations Framework Convention on Climate Change (UNFCCC) and was formally

adopted at the 2010 UN Climate Change conference in Cancun. In spite of possible revisions to

this objective, Geden & Beck (2014) describe it as an ‘anchoring device’ that allows actors to

communicate and interact.5 This climate stabilization level is possible if energy systems are

converted from the present use of fossil fuels (e.g. delivering approx. 85% of the worldwide

energy consumption) to climate-neutral energy sources, also referred to as ‘decarbonization of

energy systems’ (WBGU, 2011).

The German Energiewende is the first effort of an industrialized country seeking to decarbonize

its energy system by the year 2050 (Goldthoau, 2014).6 In a short time, after the Renewable

Energy Law (Erneuerbare-Energien-Gesetz, EEG) was established in 2000, the country reached

24600 MW of installed capacity through wind, biogas, and solar energy generation (Mautz,

4 A stabilization target of 550 ppm CO2eq, discussed notably by Stern (2006), is likely to result in a

global warming of around 3°C, and is thus incompatible, in the Council‘s view, with the commitment to avoid ‘dangerous climate change’ (WBGU, 2007). 5 The possible revision of the 2o C target is based on early critics on the adoption of a single metric and

the pressure of current rising emissions that confront this limit. However, the authors consider that a

possible revision entails a dilemma: to policy-makers it is unthinkable to continue pursuing political goals

that are patently unachievable, but if the limit is just modify signalizing that a threshold between non-

dangerous and dangerous is not absolute and scientifically defined, the reputation of climate science

would be at risk, as well as policymakers possibilities to take action. 6 The goal in Germany is to reach at least 80 % of electricity generated from renewable sources by the

year 2050.

22

2007).7 This is an important success given the infrastructure of the German electricity sector

designed to provide a state level (or Laender) coverage by means of coal-fired or nuclear plants

(Goldthoau, 2014; Mautz, 2007).

The country also started leading the process outside Germany towards implementing an energy

system transformation, by means of technology promotion through their international

cooperation agencies (WBGU, 2004; Mautz, 2007). The Johannesburg Renewable Energy

Coalition (JREC) was created in 2002, by the initiative and stimulus of Germany, who also

organized the first International Conference for Renewable Energies, in Bonn, in June 2004

(WBGU, 2004). With the Germany’s support, the Renewable Energy and Energy Efficiency

Program (REEEP), founded during the Johannesburg UN Conference on Sustainable

Development in 2002, has been investing in developing countries and in emerging economies,

managing a portfolio of clean technologies in 79 countries.8

Hein, et al (2011) indicate other attempts of coordination in the renewable energy field, on a

global level, taking place thanks to Germany’s initiative. They include the creation of the

Renewable Energy Policy Network for the 21st Century (REN21) and the International

Renewable Energy Agency (IRENA), officially established, in Bonn, in 2004 and 2009,

respectively. According to the authors, the success of these processes have been unbalanced

until now: while the production and installation of solar panels and wind generators are growing

rapidly in China and India, in many poor and developing countries, the process has been very

slow, or is non-existing. Moreover, the need for further energy transformation has been

followed by changing regulations, the entry of new players, rivalry, lack of coordination or

uncertainty about which paths to follow, and who should make the decisions.

Certainly, literature on energy transitions has been providing special attention to the spring of

emerging economies as a driver of renewable energies. Renewable energies gained important

relevance within the international agenda during the 2002 World Summit on Sustainable

Development (WSSD) held in Johannesburg, which highlighted the challenge of growing

worldwide energy demands, particularly from emerging economies with consequent rising

emissions (WBGU, 2004). Subsequently, towards the end of the decade, renewable energies

regained momentum as industrialization processes increased in developing countries (WBGU,

2011).

7 From 4200 MW wind in 1999 to 21000 MW in 2006; from 50 MW biogas in 1999 to 1100 MW in

2006; from 69,5 MW of solar energy in 1999 to 2500 in 2006 (Mautz, 2007). The installed capacity from

these three sources reach approximately 61700 MW in 2012 distributed among 31300 MW wind; 4000

MW biogas; and 26400 MW solar energy (BMWi, 2014). 8 Where We Work. (2015). The Renewable Energy and Energy Efficiency Partnership (REEEP).

Retrieved 21.04.2015, from: http://www.reeep.org/where-we-work

23

As pointed out by the WBGU (2011), if the 2°C target is to be complied while succeeding in

guaranteeing access to modern energy supply by 2030, there is a need to speed-up ‘sustainable

energy infrastructure’ and rapidly commence its large-scale implementation. They add that “If

they (developing and newly industrializing countries) do not succeed, there is a risk of path

dependencies on high-carbon energy systems that would be very difficult and costly to

overcome, which would demand decades to do so” (WBGU, 2011, p. 172).

2.2.2 Global Energy Industry Development

On a global level, those international organizations created to promote renewable energies such

as the International Energy Agency (IEA) and the WBGU, deemed renewable energies

abundant and with the potential to secure the entire, or a large proportion, of the global energy

supply in the long term (WBGU, 2011; IEA, 2012). Nevertheless, in practice, fossil fuels still

dominate energy systems, as illustrated in table 1. According to estimates from the IEA, the

electricity sector accounted for 38% of the global primary energy demand, relying by up to 75%

on fossil fuel input. The agency also estimated that, in a new policy scenario for 2035, this share

is merely reduced to 63 % (IEA, 2012).

Table 1. Electricity production per energy source in world regions

Source: Eurostat (2012). Renewable Energy Statistics

As pointed out by Bradford (2006, p. 76), the reason why these countries are leading the

industry is based on pure economics: “Europe’s average electricity prices are among the highest

in the world because it has high taxes and few native sources of fossil fuels”. This high cost

structure has motivated European countries to become leaders in “new renewable” energy

technologies, such as wind turbines. Furthermore, Japan and Germany gained advantage within

the solar market, in the mid-2000s, through government support using various types of subsidies

in order to stimulate domestic solar energy industries.

Shares

(%)

Biomass Wind

energy

Hydroelectricity Solar

energy

Geothermal Marine Fossil

fuels

Other

sources

Total

(relative)

Latin

America

3.2 0.4 54 0.003 0.7 0.0 40 2 100 (7)

North

America*

1.5 3 15 0.05 0.3 0.01 62 18 100 (22)

Europe 4.3 5.1 15 1.3 0.3 0.01 49 25 100 (17)

Eurasia 0.3 0.1 16 0.0 0.03 0.0 66 17 100 (7)

Africa 0.3 0.4 16 0.01 0.2 0.0 80 2 100 (3)

Middle

East

0.01 0.03 2.3 0.02 0.0 0.0 97 0.05 100 (4)

Asia-

Oceania

0.9 1.4 13 0.11 0.3 0.0 78 5.5 100 (40)

24

Germany led small distributed capacity investments, common for residential photovoltaic

projects, generating less than 1 MW (Deloitte, 2013). Meanwhile, the diffusion of the

technology has been considered more difficult in developing countries as they lack subsidies,

financing systems, and channels to promote sales/service (Bradford, 2006). The lack of

financial resources is highlighted here as a main barrier in advancing in the area of renewable

energy.

Along the same line, Dubash & Florini (2011) and several authors from the global energy

governance branch of literature (e.g. La Viña, Dulce & Saño, 2011; Newell, 2011), have

discussed how domestic energy policies are shaped by global energy institutions, largely

international financial institutions, who rule or govern the sector, directly or indirectly.

Moreover, within bilateral and multilateral financial institutions, the impact of private sector

investments and climate change mandates prevail. Therefore, it is also important to emphasize

the need for strong and effective governance systems to steer energy finances towards the

fulfillment of policy goals.

More recently, the renewable energy industry was struck by low gas and coal prices that

motivated an increase in their use (IEA, 2012). Fossil fuel reserves, indeed, are still believed to

be abundant, particularly coal and natural gas. Tissot (2012) and Stevens (2012) regard the rapid

expansion of natural gas for electricity generation in Latin America, during the last decade, to

the implementation of low cost technologies, market deregulation, and the privatization process

of electricity and hydrocarbon sectors.

In this regard and for the prospects of renewable energy, fossil fuels represent a competitor for

new infrastructures and financing. For instance, natural gas can provide a transition towards a

zero carbon economy though it requires important capital resources that could inhibit investing

in renewable sources; an issue which can be difficult to revert at later stages (Stevens, 2012).

Herein lies the underlying risk of using natural gas as playing a transition step or “bridge

function” towards a low carbon future (Deloitte, 2013).

2.2.3 Global Environmental Governance

The third relevant global discourse, concerning renewable energy, is the challenge of

environmental sustainability and social acceptance. As mentioned above, climate change gained

attention within the energy policy discussion, due to its relationship with global environmental

impacts caused by warming effects. In addition, transformations in the global energy landscape

are also propelled by concerns regarding local environmental impacts from global climate

change and other human activities (Dubash & Florini, 2011). In particular, the effects and

25

intensity of environmental impacts vary between the local and global levels, such as in the case

of climate change (Engels 2003).

These aspects have been discussed, on a global level, in reports from international organizations

and scholars like Martin (2004) and Brown & Quiblier (1994) studying the implications of such

global environmental consensus. According to them, global environmental governance gains

momentum during the Agenda 21, an initiative derived from the Rio Earth Summit in 1992.

Besides developing the concept of ‘sustainable development’, this agenda incorporated policies

to seek a standard of equity rooted in cultural values, prioritizing the right of people to utilize

natural resources democratically in order to meet their basic needs (Hein, 1997).

9

The sustainability of the different renewable energy sources gained attention in the global

energy governance literature, particularly concerning their ecological impacts and social

acceptance. Within this literature, the case of hydroelectricity governance has been widely

discussed. Hydroelectricity is the most widespread renewable energy technology, largely used

in Latin America.

Although, authors like Blacksher, et al. (2011: p. 40) argue that hydroelectric projects tend to be

accepted by the general public “which views hydropower as a good use of the abundant

renewable resources of Latin America’s great and powerful river systems”, other reports

mention that the low social acceptance of hydroelectric installations have caused major conflicts

over many large scale dams in different regions (WDC, 2000; WBGU, 2007). In spite of a lack

of consensus concerning its general acceptance, there are well known cases of conflicts from

dam construction, which include the 40 GW Three Gorges Dam in China, the 11.2 GW Belo

Monte HP in Brazil’s Amazon region and the 1500 MW Boruca HP in Costa Rica (Martin,

2004; Carls & Haffar, 2010).

Social concerns regarding hydroelectric plants became a global phenomenon when the social

movements against large dams reached the heart of the World Bank during the 1990s (Goldman,

2004).10

The World Commission on Dams (WCD) was created, in 1997, as a joint initiative of

the World Bank and the International Union for the Conservation of Nature (IUCN) in response

to growing opposition towards large dam projects. The WCD’s final report, launched in 2000,

9 Other authors remark that sustainable development policies prioritize equity over the criteria of

economic effectiveness and efficiency; or the ecological limits over the others (Martin, 2004). 10 In the 1990s, people from India’s Narmada River valley echoed their opposition and rejection to Sardar

Sarovar dam that resulted in the first ever Independent Review Panel appointed by the World Bank. This

report and the social movement pressure caused that the Bank’s Executive Directors voted to pull out the

project. The cancellation of another large dam in Nepal, Arun 3, marked a turn in the World Bank’s way

of doing business. Goldman (2004: 56) makes a difference between the “pre-green World Bank of the

1980s” and after 1990s, when projects started following “a new scientific protocol with environmental

and social standards”.

26

was broadly accepted, stating the strategic priorities regarding dam development, yet their

policy recommendation and principles were less welcomed by financial institutions and interest

groups.

According to the International Commission on Large Dams (ICOLD), an older international

organization representing the interests of the industry, these concerns refer particularly to the

principle of prior indigenous consultarion, which “would mean that basically no dam could be

built”.11

Despite public awareness regarding the significant ecological impacts of dams,

especially since the 2000 WCD report, there have been few studies carried out in order to

understand and monitor the effects on tropical river dynamics, particularly in isthmuses like

Central America, where dam construction is expected to increase (Esselman & Opperman,

2010; Chaves et al., 2014).

Latin America countries are more likely to pursue the continuation of hydroelectricity projects

while achieving economic growth and fulfilling low carbon global commitments. However, this

dependency on hydroelectricity is also highlighted as an aspect of vulnerability (Tissot, 2012;

Blacksher et al., 2011). In cases like Brazil and Colombia, the increasing use of natural gas is

being triggered as a reaction to hydroelectricity dependency, which has been susceptible to

changing weather patterns (Tissot, 2012). When linking global climate change and

environmental governance, climate change and its related risks are increasingly being seen as

more than an environmental externality and becoming a question of national and international

security (Dubash & Florini, 2011).

In summary, global energy governance literature provides a rich platform to understand

transformations and challenges, at a global level, and the linkages between global institutions,

global industry and global norms. However, four main limitations have been identified within

this literature. First, the three global discourses analyzed here mostly deal with emerging

economies with larger impacts on a global scale. Second, those debates tend to focus on

conventional energy sources (i.e. fossil fuels and hydroelectricity). Third, aspects of

legitimation are integrated, to a limited extent, within discussions of environmental governance

and social acceptance of technologies. Finally, these global discourses miss aspects of

deliberation concerning antagonistic and competing interests between different energy options,

which mostly take place at a national level.

11 The Era of WCD belongs to the past. (2011-2012). The International Commission on Large Dams

(ICOLD). Retrieved January 2014, from http://www.tcsr-icold.com/Detail/49

27

2.3 National Energy Governance

Regarding the role of energy governance at a national level, empirical academic research on

energy has been focusing on factors restraining the use of alternative renewable energies. This

section closes in to the main determinants for renewable energy use discussed by this literature.

They begin with low carbon energy systems, followed by economic growth and social

development, followed by the aspect of reliability of electricity services, and lastly technology

cost and other incentives. Most of them are connected to global energy challenges (i.e. energy

access, climate change, and economic and social development).

2.3.1 Carbon Neutrality and 100% Renewable Energy Goals

The recent trend towards decarbonization of the economy and low carbon energy systems has

reached every corner of the world. In this sense, what triggers countries’ ambition towards low

carbon, carbon neutral or 100% renewable energy goals? Particularly focusing on developing

countries where other challenges can be seen as a priority.

Concerning carbon neutrality aims, Gössling (2009) proposes an answer in terms of climate

change imperatives, to pressure the tourism industry to become sustainable in regard to its

contribution to climate change, often as a response strategy for tourism destination countries,

such as Costa Rica. Tourism is a crucial source of economic income, in several countries,

including Costa Rica. Therefore, low carbon energy goals are indirectly linked to challenges of

economic and social development.

In 2007, the 2nd

International Conference on Climate Change and Tourism urged the entire

tourism sector to take action and face climate change as one of the greatest challenges to

sustainable development (UNWTO, 2007). This declaration called for a range of actors to take

action, including governments, international organizations and consumers. Governments within

destination countries should focus on investments in energy efficiency programs and use of

renewable energy resources, whereas consumers should make travel choices leading to smaller

‘carbon footprints’.

Strategies such as “carbon neutrality”, “low carbon” and “100% renewable energy” were all

thought out to portray a destination that does not contribute to climate change, though each

initiative has different goals. Carbon neutrality refers to the compensation of carbon emissions

through projects that save emissions, usually in other non-tourism sectors, such as energy

efficiency, renewable energy or forestry projects.12

Low carbon means reduction of emissions,

12 Forestry projects include aforestation, reforestation, avoided deforestation, forest conservation and

forest management.

28

which is one possible strategy within carbon neutrality using carbon free energy sources.

Meanwhile, strategies for 100% renewable energy suggest that no emissions are released,

including all transport emissions, and are calculated on a lifecycle basis.13

In most countries, offsetting strategies are heavily focused on forestry projects. In fact, “carbon

neutral” is correct if an amount of CO2 similar to that released by a given tourism related

activity is stored in biomass, for instance in a forestry project. However, there are problems

concerning the permanency of these sinks and the land available for them. In contrast, projects

focusing on energy efficiency or renewable energy would then be compensational (i.e. low

carbon strategy). 14

As of 2009, the nations committed to carbon neutrality were the Maldives by the year 2020,

Costa Rica by 2021, Norway by 2030, as well as New Zealand, Scotland and Sri Lanka without

a specified year (Gössling 2009). Countries like Costa Rica, New Zealand and Norway are

already reporting a significant level of annual carbon removal through forest management.

Energy efficiency and renewable energy improvements are also important elements for their

reduction strategies. For instance, the authors mention Costa Rica’s intention to focus on

biofuels.

The economics of carbon offsetting schemes, in countries like Sri Lanka, Costa Rica and

Scotland, seek to involve industry and tourists on a voluntary basis. However, the complexities

and difficulties of carbon neutrality persist and there are no clear priorities for actions (e.g.

starting with emission intense sectors). Gössling (2009) considers that, in their current form,

carbon neutrality approaches are seen rather as discourses to justify business as usual tourism

development with views towards self-regulation, and might, in practice, even prevent the

implementation of serious climate policy measures.

2.3.2 Economic Growth and Social Development

Focusing on aspects of sustainable development, at a national level, a group of scholars have

been dealing with the relevance of economic, social and environmental aspirations (GENI,

2009; Fletcher, 2010; Pachauri & Spreng, 2012). Pachauri & Spreng (2012) remarked that

international organizations from the United Nations system and other non-governmental

entities, regarded on occasions as implementing agencies, exerted influence towards more social

and environmental ambitions in the energy sector. Since 2000, the emphasis on achieving the

13 This not possible as long as aviation is involved. 14 The World's 3 'Carbon Neutral Nations' Gear Up to Cut Emissions. (2009, November 24). Retrieved

February, 2013, from: http://www.treehugger.com

29

Millennium Development Goals has reoriented energy targets towards the social and poverty

alleviation benefits of electrification.

In terms of reducing poverty, limited access to electricity, in fact, increases people’s struggles in

daily life (IPADE, 2004).15

This situation has forced mainstream dependence on biomass energy

for cooking (e.g. fire wood and charcoal) and kerosene for lighting, especially in rural areas.

Therefore, it is not by chance that, especially in the case of developing countries, attention has

been centered on financial constraints and the role of multilateral aid agencies to tie renewable

energy to development (IPADE, 2004, KfW & WB, 2005; Newell, 2009).

Developing countries have historically been able to finance hydroelectric dam construction

through infrastructure loans from international lending institutions, such as the World Bank

(Bradford, 2006). According to the World Bank (2003; 2008), construction of large-scale

infrastructure projects was a popular use of financial funds until the 1970s. Though, this has

been replaced by investing in smaller health and education programs, in the 1980s and 1990s,

there is now a renewed support for large infrastructure projects as a mean of reducing poverty.

In this regard, hydroelectricity projects have been considered and promoted as a means towards

a clean, safe, and reliable energy supply required for steady economic growth and for reducing

fossil fuel dependency (GENI, 2009). As pointed out by Fletcher (2010), hydroelectric dams

have long been one of the collaborations of conventional development policy. They appear to

possess compelling economics because they provide large quantities of reasonably cheap

electricity compared to many other energy forms (i.e. between 2 and 10 cents per kWh)

depending on dam location, size and type (Bradford, 2006).

In terms of environmental aspirations, World Bank projects support the achievement of

universal access to electricity and modern household fuels, based on low-cost options with an

emphasis on renewable sources. 16

Small off-grid photovoltaic systems, or solar home systems,

are the main technology used in rural energy projects and programs. Therefore, rural

electrification programs with renewable energy sources are directly related to CO2 emission

reductions.

Moreover, environmental objectives and renewable energy use are also linked to economic

growth in developing countries. The example of the aforementioned tourism and leisure

15 Besides, the lack of electricity affects the capacity to develop productive activities, water access,

education, culture, information, health, hygiene. It is also relevant factor to impel rural migration to cities

and thus create territorial imbalances. 16 Sustainable Energy for All: Sector Results Profile. (2014, April 9). Retrieved 22.04.2015, from:

http://www.worldbank.org/en/results/2013/04/10/sustainable-energy-for-all-results-profile

30

industry illustrates this. The tourism industry is considered an important concern for the global

challenges of climate change and poverty reduction (UNWTO, 2007).

2.3.3 Reliable Electricity Services

Literature on national energy governance provides significant attention to secure clean, safe and

reliable electricity. Cordaro (2008) and Bradford (2006) state that reliability is actually a key

figure used by ‘operators’ of national energy systems. It is defined as the capacity of electricity

plants to continuously supply power to customers, at any time, an issue considered critical “in

the delicately balanced modern electricity grid” (Bradford, 2006, p. 9). Under this framework,

different energy sources and their coordination within the energy system serve to fulfill the

changing energy demand, help to keep operation costs low, and offer long term stable and

attractive pricing.

Different electricity sources are classified as base, peak, and intermediate electricity plants

according to their load factor, which measures their utilization rate or capacity factor (Cordaro,

2008).17

As an efficiency measure, the capacity factor not only depends on the type of fuel and

plant design, but also varies, over time, depending on the technology’s efficiency. In the case of

solar and wind energy, in particular, efficiency is constantly improving (World Nuclear

Association, 2014).

On a general basis and as means to classify energy sources, the base load sources include coal

and nuclear facilities, as well as hydroelectricity and geothermal energies among the renewable

options. These plants run throughout the whole year, except in the case of repairs or scheduled

maintenance. Peak load plants are most often fueled by natural gas and oil, and are typically

smaller than base load plants. While intermediate load plants include intermittent sources, such

as smaller hydropower plants, solar energy and wind parks that cannot be relied upon to meet

constant supply needs, nor can they be immediately called upon to meet peak demands.

According to these technical characteristics, dams offer several advantages (Blacksher et al.,

2011; Bradford, 2006; Cordaro, 2008). First, dams often serve as base load plants to fulfill the

needs of larger scale users. Second, they are suitable to satisfy the need of peak load plants with

reservoirs that are ready to generate electricity at any time. Third, these technologies are

attractive to keep operational costs low and produce energy continuously. Fourth, the

engineering technology and economics of dams are well understood by public and private

investors, financing organizations, and engineering companies.

17 Electrical load factor is a measure of the utilization rate, or efficiency of electrical energy usage. It is

calculated by dividing the actual output that is provided by a specific electric plant into the maximum

possible electricity output during the year (Cordaro, 2008).

31

As a complement to base load plants, fossil fuels are used for electricity generation with peak

load characteristics. These plants are highly responsive to changes in electricity demand and can

be started-up relatively quickly, with the capacity of varying the quantity of electricity output by

the minute (Bradford, 2006). Peak load plants are very expensive to operate in relation to the

amount of power they produce and the cost of fuel to run them (most often natural gas and oil).

Nevertheless, due to their size, they are easier and less expensive to build (Cordaro, 2008).

In contrast, many renewable energies, such as wind parks, solar energy and micro-hydroelectric

plants are not available on a continuous or consistent basis (WBGU, 2011). Therefore, they

cannot be relied upon to meet constant supply needs, nor can they be immediately called upon

to meet peak demands, but they are appropriate as intermediate load plants. They can satisfy the

gap reducing the need for fossil fuel or the overuse of peak plants during heavy demand periods

(i.e. peak load shaving) (Bradford, 2006; Cordaro, 2008). Compared to peak plants, such as oil-

fuel plants, intermediate load plants are larger; therefore, their construction costs are higher,

though they also run more efficiently (Cordaro, 2008).

Unlike fossil fuels, renewable energies are unlimited in terms of the total quantity available.

However, there are potential technical limits to increment their implementation without the

added inclusion of energy storage solutions (Bradford, 2006; WBGU, 2007). As pointed out by

the WBGU (2011), in theory, these technologies have upper limits in terms of the amount of

energy per unit time that they can supply (known as ‘potential’). For example, in practice, the

technical usability of solar energy is limited by the amount of incoming solar radiation per unit

area and time.

The technical limitations or imbalances of these sources can be compensated by the use of smart

electricity networking and the creation of energy storage systems (WBGU, 2011).18

Electricity

companies, that build centralized solar plants, can manage their electricity load through the grid

in the same way that individual consumers or decentralized generators do, feeding-in the

electricity produced during daytime and using grid electricity at night (Bradford, 2006). Smart

grids, as well as any other changes, will add costs to the bill, but they do provide other realms of

possibilities for renewable energy use (Deloitte, 2013).

2.3.4 Technology Cost and Incentives

Economic drivers of decisions concerning energy are largely explored in the energy governance

literature. Scholars like Beck & Martinot (2004) and Doner (2007) comment, that in most cases,

18 “Smart networks” or “smart grids” can help manage the intermittency that has long been renewable

energies’ Achilles heal, accordingly to IRENA, this is a fundamental infrastructure to make renewable

scale up (Deloitte, 2011). However there are also critics to this… (found paper about this).

32

energy policies and strategies exclude renewable energies and other alternatives as they are

considered to be too costly and technologically unfeasible. The authors reflect on the arguments

restraining their use, which also refer, in one way or another, to their perceived risks, either

technical (mentioned above), financial or legal, and warning that the country does not have the

capabilities to implement them.

The economic barriers, on a national level, are linked to global industry development and

technological advances improving efficiency and reducing economic constraints. The WBGU

reports of 2004 and 2007 identified, that in terms of economic competitiveness, wind energy,

biomass and hydroelectricity were already competitive, as well as the small applications of solar

energy. Meanwhile, the WBGU estimations suggest the international competitiveness of large

scale implementation of solar energy from around the year 2030. In addition, the council

assumes that the supply cost will decline continuously and considerably in conjunction with the

growing market volume (WBGU, 2004, p. 3).

Global energy industry analysts noticed that among solar technologies, the photovoltaic is the

most extensively used worldwide, but also the most expensive (Tissot, 2012). Nevertheless, its

cost and efficiency aspects have been drastically improved since 2008. For instance, the cost of

producing photovoltaic systems has dropped from $11 per watt in 1995 to as low as $5 in 2005,

falling to less than $2 in 2011 (Bradford, 2006).19

On the other hand, according to GENI (2009), one reasoning commonly discussed is the lack of

incentives and insight towards other technologies, as opposed to established subsidies for

conventional sources. For example, the IEA (2012) stated that, in 2011, global subsidies for

fossil fuels totaled US$523 billion dollars, a 30 % increase from the previous year, and six times

more than the United States’ US$88 billion in subsidies towards renewable energy. Similarly,

the development of hydroelectricity technologies receives increasing support from governments

(REN21, 2011).

From this perspective, as stated in several reports from international organizations in the energy

field, governmental policies and incentives often provide the primary economic motivation for

construction of renewable generation facilities (OLADE, 2009; 2011; EIA, 2011; REN21,

2011). According to the EIA (2012), the rapid increase in renewable energy generation on a

global level, mostly solar energy, is mainly driven by sustained subsidies on a national level.

They highlight the role of financial mechanisms known as feed-in tariffs (FITs), used in the EU

19 En Latinoamérica está el futuro de la energía solar fotovoltaica. (2011, December 01). Retrieved

22.04.2013, from http://www.suelosolar.es/newsolares/newsol.asp?id=6407&idp=1

33

to enable individuals to install small scale solar energy systems in their homes and businesses,

and sell excess power back into the grid (i.e. net metering). 20

When considering the case of Germany, Flüeler et al. (2012) and Mautz (2007) reflect, that up

to date, FITs are the most effective economic measure for foster renewables. According to

them, this instrument may be set in consideration of price, a chief factor affecting the

availability of fuels and connected to local environmental degradation. Nevertheless, the authors

also observe that political regulation, as a driving force, was not dependent on a single

instrument.

The Renewable Energy Law (Erneuerbare-Energien-Gesetz, EEG), established in 2000, and its

subsequent reforms (e.g. EEG 2004, EEG 2009, EEG 2012, PV-Novelle, EEG 2014), was and

still is a key instrument in the promotion of renewable energy in Germany.21

However, besides

the EEG and technology-specific FITs for electricity producers, the main elements of the

German “policy mix” are financial support for research and development, as well as for private

investments (e.g. including house owners), and the implementation of appropriate instruments

in the field of planning law (Mautz, 2007). More recently, some Latin American countries,

namely Argentina, Dominican Republic, Ecuador, Honduras, and Nicaragua, are using FITs to

promote renewables (Jacobs et al., 2013).

Even so, some problems have emerged, in recent years, with regards to the FITs due to mistakes

in overpricing and over-subsidizing, particularly solar energy installations and social conflicts

against large outdoor solar energy plants (Weigl, 2014; Mautz, 2007). Nonetheless, Goldthoau

(2014) and Mautz (2007) consider that the major obstacle to implement the country’s ambitious

decarburization goals in Germany is the inertia of the established energy infrastructure. On that

subject, another common, but less established, explanation pertains to how renewable energy

development clashes with the interests of powerful players, particularly large energy companies,

and therefore receives few supporting incentives (GENI, 2009). For instance, energy policy

goals, such as carbon neutrality and renewable energy targets, have been followed by

contradicting interests, values, and power relations regarding energy decisions. These aspects

are considered in the next section.

In summary, the branch of literature concerning national energy governance, generally, analyzes

problems through the lens of a few actors (e.g. electricity ‘operators’ or regulators) and with a

focus on single factors, chiefly economic drivers of energy decisions. Although operators and

20 It is much about the right to connect and sell energy, as it is about the specific payment for each

technology (Deloitte, 2011). 21 Erneuerbare-Energien-Gesetz 2014. (2014) Retrieved 22.04.2014, from

http://www.bmwi.de/DE/Themen/Energie/Erneuerbare-Energien/eeg-2014.html

34

regulators are relevant in governing national energy systems, the perspectives of electricity

companies and civil society organizations are overlooked. In this sense, a less developed

explanation concerns the clashes between renewable energy development and the interests of

powerful players, particularly large energy companies. Aspects of legitimacy are barely

mentioned.

2.4 The Role of Change Actors in Energy Transformations

This section provides an overview of studies dealing with the role of change agents and

historical integrated perspectives of transformations in the energy field. Incidentally, authors in

this branch drive attention to contradicting interests, values and power relations about energy

decisions. This section is divided in two parts. The first part identifies the main institutional and

political transformations shaping the energy sector in the last decades. The second part draws

attention to a less widespread group of literature dealing with historical and integrated

perspectives of conditions and energy patterns unfolding over time.

2.4.1 Institutional and Political Transformations and Actors Involved

Scholars, from the global energy governance branch, regard global climate change as a main

factor shaping the global energy landscape. National energy governance literature makes

reference to economic and social development goals, besides reliable energy access which

drives the decisions of main actors. In this literature, national governments, electric companies

and regulatory bodies have been making choices regarding energy options influenced by

changing global and national contexts.

With attention to changing institutional and political contexts in developing countries, Pachauri

& Spreng (2012) and Goldtahou (2014) state at least two transformation waves, in the energy

field, in the last decades. The first resulted from liberalization reforms and the second is

connected to climate change and the shift towards decentralized energy.

Liberalization reforms began in Latin America and spread throughout the world during the

1980s and 1990s. During these processes, private actors started to gain relevance from the state.

Despite efficiency improvements, most assessments refer to the negative consequences of these

reforms in terms of social and environmental sustainability on the long term. These discussions

have been gaining importance in the energy field.

From a global energy governance standpoint, Florini & Dubash (2011), Flüeler et al. (2012)

consider that the pro-market ideology, that has transformed the energy sector in many countries,

faces new competitors from a resurgent model of state capitalism. On that subject, the

35

regulatory and controlling bodies have become highly relevant and must provide a required

long-range perspective for public significance. Subsequent to these reforms, governments and

electric companies have remained central but require stronger interrelation with a wide variety

of non-governmental actors and levels of interaction (Norman, Bakker, & Cook (2012).22

The second transformation wave is driven by a context of mitigating climate change and

alleviating energy poverty on a local scale, discussed in previous sections. Furthermore,

Goldtahou (2014) draws attention to an outcome derived from both trends that resulted in a shift

towards decentralized energy systems, named “distributed electricity generation” or on-site

generation. Distributed electricity generation is not new. However, contrary to central

generation, it has been considered to be a part of a new paradigm that illustrates the tensions

between past and future electricity configurations. 23

In fact, capital intensity, characteristic of centralized energy infrastructures, also introduces

complex interests and possible contradictions since more decentralized energy systems will

leave grid extension excluded. As mentioned by Bradford (2006), in relation to on-site

generation, as clients become generators of their own energy it is logical that the (electricity)

distribution company shall reduce its business yields. In the case of Germany, Mautz (2007, p.

114) refers to the economic dominance of suppliers (or distributors), their organizational

structures and their long-term investment strategies, as “evidence that the major companies in

the electricity sector will pursue their well-tried path in the future”.

The energy transition in Germany is a good example to illustrate the relevance of political

power and legitimation aspects, besides technical and economic considerations. Departing from

highly centralized infrastructures, by the year 2011, half of the county’s 53000 MW of installed

renewable energy was locally owned (Deloitte, 2013). On the one hand, energy transformation

in the country required both decentralized production and interconnected transmission

infrastructure to deal with peak load problems across states (Goldthoau, 2014). On the other

hand, this shift was socially embedded and historically linked to social and environmental

movements of the 1970s, reinforced by operator and manufacturer networks during the 1990s

(Mautz 2007).

In terms of governance and the roles of key actors, according to this emerging paradigm, more

collaboration between government policy and industry investment is required (Deloitte, 2011).

Goldtahou (2014, p. 138) asserts that even off-grid solutions are far from being independent

22 The management level is relevant in terms of the type of actors involved and the scale in which they

participate (i.e. local, national and global) (Norman et al, 2012). 23 Distributed (decentralized) electricity generation, is loosely defined as small scale electricity generation

or storage systems located near or at the building site (on-site generation) (IPCC, 2001).

36

from other scales, “as they are part of a larger energy infrastructure ecosystem”. The

multiplicity of roles, resulting from this decentralization process, also raised questions regarding

political power, including legitimation questioning in terms of who makes decisions regarding

infrastructure (Goldtahou, 2014).

Authors from different viewpoints agree that effective solutions rely on social deliberation and

political negotiation (Bakken et al. 2012; Blacksher et al., 2011; Geden & Beck, 2014).

According to them, policies are based on individual preferences or political and management

priorities (Bakken et al., 2012; Blacksher et al., 2011). Moreover, “decisions regarding

acceptable risks are inherently political in nature” (Geden & Beck 2014, p. 748).

2.4.2 Historical Integrated Perspectives

Although the consensus regarding the effectiveness of more integrated approaches on policies,

academic empirical research remains fragmented. Pachauri & Spreng (2012) and Schienstock

(2007) remark that academic empirical research, regarding energy, is often disciplinary research

that is vital and important, but rarely suited to furnish sound policy advice. Concerning the

question of how a new energy trajectory emerges, literature is limited in providing answers

given that: “The emergence of a new techno-organizational path cannot be explained by

referring to single factors or single models” (Schienstock, 2007, p. 254).

In the case of Costa Rica, the work of two scholars is highlighted here as an example supporting

these arguments, in the renewable energy sector. Wilde-Ramsing & Potter (2008) found that

despite facing several barriers, such as the economic and institutional constraints mentioned

above, which would hamper a country from developing renewable energies, Costa Rica’s

electricity comes mainly from these sources.24

The authors introduce then, an institutional

organizational approach to explain the interrelations between the Costa Rican electricity

institute and the private sector named as a socially “embedded autonomy”.

However, less-known literature deals with historical analyses of conditions and patterns

unfolding over time. For example, in explaining cases from developed countries, there are

studies that relate the problems restraining renewable energies with social conditions of

innovation and historical analyses (e.g. Meyer & Schubert, 2007; Jørgensen, 2012). None of

these reviews, using this approach, were identified in Latin American countries.

24 Costa Rica is not a wealthy, industrialized country to invest in capital intensive renewables. It has a

small energy market, but it does not completely rely on hydroelectricity and it is commanded by a state-

owned firm, which in developing countries, is considered inefficient and risk adverse. Despite this, the

country has proof of oil reserves but it has refuse this kind of investments (Wilde-Ramsing & Potter,

2008).

37

Scholars researching energy transition in Costa Rica refer to political and institutional inertia

tending to benefit conventional energy sources (Vargas, 2002; Jimenez, 2009). However, none

of them has directly approached this phenomenon in order to develop theoretical explanations.

For instance, Vargas (2002) aknowledges that institutional development and experience are the

main factors affecting the performance of the electricity sector and the space for clean energy

sources. The author considers path-dependency and patterns of interaction between different

actors as part of the energy problems in developing countries, even though the study did not

contribute much attention to these aspects.

With regards to the above, additional insights are required to understand the demands of urgent

changes in the energy sector, including stable and lasting solutions. Nevertheless, less attention

has been paid to the voice of civil society organizations and to aspects of political power and

legitimation concerning energy transitions over time. The following Chapter investigates the

most important dimensions of path dependency along with their social dynamics.

2.5 Concluding Remarks

Academic debates on energy transition towards low carbon energy systems has been looking at

determinants from global, national, and/or agent centered angles. Each of them provides

answers, to a certain extent, to the following questions: (1) why do countries engage in low

carbon and renewable energy goals?; (2) why do some energy options dominate while others are

relegated?; and (3) how do aspects of legitimation influence energy decisions? Nonetheless, I

identify three main gaps within those debates, as illustrated in table 2.

Table 2. Answers and gaps from literature

Source: Own compilation

Literature Review Global Energy

Governance

National Energy

Governance

The Role of Change Agents

Why Do Countries

Engage in Low Carbon

and Renewable Energy

Goals

- Global climate change - Climate change effects

- Technology cost and

incentives

- Liberalization reforms

- Global climate change

- Decentralized energy systems

Why Some Energy

Options Dominate While

Others Are Relegated

- Global industry

developments

- State incentives - Current social interests and

political alliances

How Aspects of

Legitimation Influence

Energy Decisions

- In global environmental

governance discourses

- Through sector regulation

and policy implementation

- Centralized vs decentralized

energy systems

Actors Involved - International financial

organizations

- Governments and civil

society organizations

- Governments

- Regulators

- Private sector

- State

- Electricity companies

- Civil society organizations

38

First, in the study of renewable energy governance the fragmentation among sources has grown.

Hence, in approaching the different types of renewable energy sources, studies in the field have

to evolved from the general consideration of renewable energies without distinctions, or a

differentiation between hydro from non-hydropower sources and more recently, towards a

broader separation and examination between non-hydro renewable energy sources.

Second, I found a regional research gap, since in many cases the focus is on regional powers

and emerging economies (e.g. Brazil, India, China) confronting global energy challenges.

Therefore, a bias is present when answering the above mentioned questions.

Third, although state actors and regulators are relevant in governing national energy systems,

the perspectives of electricity companies and civil society organizations are overlooked.

Though, they are increasingly relevant in the discussion on energy goals. In this sense, a less

developed explanation pertains to how renewable energy development clashes with the interests

of powerful players, particularly large energy companies, and thus, receives few supporting

incentives.

The fourth and last gap is methodological in character. A less widespread group of literature has

been dealing with historical analyses of conditions and patterns unfolding over time and

restraining renewable energies. Most studies have limitations explaining policy gaps because

they typically look for synchronic determinants of policies, for example, in current social

interest or in existing political alliances (Pierson, 1996). Meanwhile, a historical approach

emphasizes the importance of initial decisions and choices of venues as well as it introduces

notions such as that of path dependency.

Concerning responses to the aforementioned questions, energy governance literature, on a

national and global level, regard climate change as the main factor of energy transformation in

the last two decades (question 1). The climate change discourse is also outlined as a factor that

spurred the construction of hydroelectric dams worldwide. However, the standpoints of “small

states” are missing, such as those in Central America, which are considered amongst the most

vulnerable to the impacts of climate change (CEPAL, 2007; PEN, 2011).

Within the global energy governance branch, debates on energy transition tend to focus on

conventional energy sources (i.e. fossil fuels and to some extent hydroelectricity), which limit

further discussions on the role of alternative renewable sources (question 2). In addition, aspects

of legitimation are integrated into discussions of environmental governance and transnational

networks of actors. Nevertheless, it is overlooking a deliberation concerning antagonistic and

competing interests between different options (question 3).

39

Meanwhile, national energy governance literature tends to focus on barriers hindering

renewable energy use for economic growth and social development, reliable electricity and

technology cost and incentives (question 1). In finding answers to the second question, this

literature directs its attention to load factors, costs, and low carbon characteristics of the

different technologies. Government support through incentives is also highlighted as a key

determinant of renewable energy use (question 2). Aspects of legitimacy are barely mentioned

relating the figure of the regulators (question 3).

Literature regarding change agents refers to the effect of institutional and political

transformations in the energy field (i.e. liberalization reforms, climate change, distributed

electricity generation) as drivers of energy transitions (question 1). Contradicting interests,

values and power relations concerning energy decisions are analyzed in works that exemplify

conflicts between centralized and decentralized energy systems (linked to questions 2 and 3).

40

3 Theoretical Framework: Neoinstitutionalism and the Mechanism-Centered

Approach

3.1 Introduction

This chapter introduces the concepts and the theoretical framework, which are the basis for the

historical analysis of policy decisions towards achieving the goal of carbon neutrality in Costa

Rica’s energy system. At first, the chapter defines path dependency and its elements, also

explaining why it is defined as a problem of policy outcome. Successively, it sharpens the

concept of self-reinforcing mechanisms and differentiates three explanatory propositions of

“efficiency”, “legitimation”, and “political power” mechanisms. Thereafter, it elaborates on

conceptual elements of the path breaking phase possibly reversing path dependency

mechanisms. Lastly, it presents a summary of the theoretical approaches and their main

contribution to the present research.

The purpose of this chapter is to understand the causal mechanisms of technology development,

stabilization, and change in political and institutional contexts. The main findings of this chapter

are twofold. The first relates to concepts and theory. The second refers to the approach of policy

problems from a theoretical perspective.

Regarding concepts and theory, the present research proposes a mechanism-centered analysis

with a pragmatic use of theories. Therefore, the analysis relies on a combination of existent

theoretical approaches of path dependency and path breaking, combined with other elements of

governance, at national and global levels, as well as notions of future expectations. Concerning

policy problems, the case under analysis is framed as a problem of policy outcome in which the

country got entrapped. Analysts of mechanisms and processes regard the coherence and

significance of episodes as something to be proven rather than assumed (Tilly, 2001, p. 25-26).

Hence, the focus on self-reinforcing mechanisms is used to explain the gaps in political control.

3.2 Defining Path Dependency

3.2.1 Neoinstitutional Approaches of Path Dependency

The present research departs from neoinstitutional approaches of path dependency and path

creation advanced by Mahoney (2000), Pierson (2004), Garud & Karnøe (2003), Meyer &

Schubert (2007), among other scholars, to cope with the dual nature of institutions, their

dynamism, as well as their permanence. Both concepts help to explain stabilization, though path

dependency emphasizes the influences of structure on outcomes, while path creation underlines

agents’ relevance. As opposed to institutionalism currents that traditionally focused on the study

41

of formal institutions, neoinstitutionalism, restated the relative autonomy of political institutions

(Hall & Taylor, 1996; March & Olsen, 1984; Mayntz & Scharpf, 1995; Scharpf, 1997).25

Path dependency is broadly defined within neoinstitutionalism as a phenomenon of limited

change where reproduction of initial institutional or policy decisions, even suboptimal ones,

prevail over transformation (Liebowitz & Margolis, 1995; Pierson, 1996). Therefore, the

concept helps to explain how the evolution of rules and policies, along with social adaptations,

create and increase structured polity that restricts the options available to all political actors

(Pierson, 1996). In this sense, in path dependency, it is the actors’ constraint that emphasizes the

influence of structure on outcomes.

Conversely, the concept of path creation stresses the role of agency in the stabilization of an

institutional or technological path. The concept of path creation was incorporated in the theory

of path processes by Garud & Karnøe (2001; 2003) and further developed by Meyer & Schubert

(2007) in order to expand the scope of emergent events allowing for elements of strategic

change. Concepts related to path creation include vested interests, fixed assets, and sunken

costs. Therefore, according to path dependency and path creation, the quasi-irreversibility of

institutional or technological developments is not only based on investments but also on

interests.

As indicated by Berthod & Sydow (2013), with the introduction of ‘institutional entrepreneurs’,

the neoinstitutionalist focus shifted towards issues of change and evolution. Actions of

institutional entrepreneurs have implicit processes of confrontation (e.g. from those who resist

change and defend the status quo). Then again, aspects of resistance and the struggle over

reproduction evoke path dependency in particular cases, wherein organizations fail to depart

from replication and sedimentation of structure over time.

Within neoinstitutionalism there are different schools of thought, including historical

institutionalism, rational choice institutionalism, and sociological institutionalism (Pierson,

1996; Hall & Taylor, 1996). Although they have developed quite independently, they all seek to

study the role of institutions in determining social and political outcomes, though using a

different analytical approach. Among them, historical institutionalism provides a theoretical rich

ground to understand the processes or mechanisms, where unintended consequences and

inefficiencies generated by existing institutions, contrast images of institutions as more

purposive and efficient (Pierson, 1996; Hall & Taylor, 1996).

25 Functionalism and rational choice theories were distinctive expressions of the ‘behavioral revolution’

against institutionalism, driving attention towards the individual. As a reaction, neoinstitutionalism

stresses that institutions are neither a mirror of society (behaviorism) nor merely the site for individual

strategies (rational choice) (March and Olsen, 1984).

42

This historical approach emphasizes the importance of initial decisions and choices of venues,

and introduces notions such as those of path dependency. Therefore, path dependency is one

feature of historical institutionalism that has stressed the ways in which such initial institutional

or policy decisions, even suboptimal ones, can become self-reinforcing over time (Pierson,

1996). Historical institutionalists also underline the asymmetries of power over institutions, the

role of ideas and their institutionalization over time (Hall & Taylor, 1996).

The concept of institutionalization (Colomy, 1998) and path dependency (Liebowitz &

Margolis, 1995; Pierson, 1996) refer to this phenomenon of institutional persistence in which

reproduction prevails over transformation to a certain extent. However, institutionalization and

path dependency are not the same. Institutionalization makes reference to how specific

organizational structure or pattern of activities are consolidated and taken for granted over time

(whether as a matter of formal law, custom, or knowledge) (Colomy, 1998: 285; Sydow et al.,

2009). Similarly, structural inertia or imprinting issues do not equate to path dependency, when

these concepts refer to simple identification of traces along a trajectory, accumulation, mimicry,

isomorphism, or simply the identification of inertia (Sydow et al., 2009).

Scholars, in path dependency theory, are mostly inclined to perceive the process of becoming

path dependent as one particular form of institutionalization (Berthod & Sydow, 2013). Still,

path dependency is not only structural inertia or persistence (i.e. external imperatives or

mechanisms that enforce the diffusion and maintenance of institutions), especially if it is not

clear how self-reinforcement (i.e. internal processes) occur and in what form. In the absence of

internal processes of reinforcement, path dependency and institutionalization cannot be

exchangeable.

3.2.2 Elements of Path Dependency

Among the constitutive elements of path dependency or path creation, the ones that stand out

are: agency, structure, critical juncture, and self-reinforcing mechanisms. Despite differences on

emphasis, most scholars suggest a better understanding of their conceptualization and

relationship by looking at different phases of path development, distinguishing “genesis”,

“emergence and diffusion”, “reproduction”, and “stability” (e.g. Mahoney, 2000; Meyer &

Schubert, 2007; Sydow et al., 2009; Sydow & Schreyögg, 2013). Each phase has different

causal regimes that evolve in a progressive logic of becoming locked into a path and eventually

of un-locking processes. They are summarized in table 3.

Genesis: the Role of Agency

43

Agency, either as an individual or collective action, is highlighted in the first phase of path

dependency that can be characterized as an open decision making situation when several

alternatives are possible. According to Giddens (1984), an agent is one who exerts power or

produces an effect. Thus, power is not an intention, but rather the capability of getting things

done. Nevertheless, this initial phase is neither of completely unrestricted choice (i.e. rational

choice theory), nor of determinacy (i.e. historical institutionalism). Rather, it is one of decisions

embedded and connected with other developments and imprints from the past. In this phase,

agents’ decisions are contingent (i.e. their outcomes are unforeseeable consequences of

purposeful action), though not random.

Emergence and Diffusion: the Relevance of Critical Junctures

A critical juncture marks the division between the genesis and the phase of emergence and path

diffusion, also called path creation or formation phase. A critical juncture is a moment of

substantial institutional change or a ‘branching point’ from which historical development moves

onto a new institutional formation and developmental pathways (Thelen, 1999; Hall & Taylor,

1996). Hence, increasing selectivity begins in this phase and contingent or mindful choices are

made, triggering self-reinforcing dynamics. As long as decisions are made, the number of

alternatives is reduced, and choices, while still possible, are essentially constrained.

This element highlights the importance of timing, sequencing, and interaction of ongoing

political processes (Thelen, 1999; Pierson, 2000). In consequence, institutions continue to

evolve in response to changing environmental conditions and at the hands of political agents but

in ways that are constraint by past trajectories. The main problem lies in explaining what

precipitates such critical junctures. Although historical institutionalists generally stress the

impact of economic crisis and military conflict, many do not have a well-developed response to

this question (Hall & Taylor, 1996: 942).

Reproduction: the Dynamics of Self-Reinforcing Mechanisms

During this third phase, there is further restriction to the scope of action. Decisions are led by

mechanisms of self-reinforcing dynamics that may end up in a stage of stagnation or a lock-in.

Self-reinforcing mechanisms are considered a main feature of path dependency. They are

conceptualized as processes, patterns, or routines that develop dynamics on their own, rendering

the whole process increasingly irreversible (Sydow et al., 2009; Sydow & Schreyögg, 2013;

Mahoney, 2000). Self-reinforcing mechanisms exhibit increasing benefits with their continued

adoption, different to reactive sequences of events or similar patterns describing merely

institutionalization, institutional persistence, imprinting, or structural inertia (Mahoney, 2000).

44

In answering how self-reinforcement occurs and in what form, three main branches within path

dependency literature are differentiated: historical institutionalism, political science and

organizational analysis (Sydow & Schreyögg, 2013). Scholars, from organizational studies,

draw in particular on Arthur’s mechanisms (Arthur, 1994) of self-reinforcing processes that

result of economic logics producing increasing returns (Sydow & Schreyögg, 2013; Sydow et

al., 2009; North, 1990). Best known drivers from this branch include learning effects and

cooperation on the social level, or economies of scale on the technological level (Sydow et al.,

2009).

Historical institutionalism cuts across the usual sharp dichotomy between rational choice and

non-rational choice work (Hall & Taylor, 1996; Pierson, 1996). Instead, the approach is drawing

on researches from both traditions that emphasize the significance of historical processes. Thus,

it includes rational choice analyses, as well as sociological approaches that consider crucial

issues of institutional evolution and path dependency (Pierson 1996). Hall & Taylor (1996)

differentiate among the calculus approach, the cultural approach, and the asymmetries of power.

With applications on political science case studies, Mahoney (2000) and Mahoney & Schensul

(2006) have attempted to categorize four possible forms of reproduction mechanisms:

Utilitarian, Functional, Power, and Legitimation.26

According to them, most economists assume

that utilitarian mechanisms of cost-benefit analysis underpin processes of institutional

reproduction, once increasing return processes have been initiated. Nonetheless, understanding

other specific mechanisms that produce self-reinforcement is crucial because alternative

mechanisms suggest different ways in which patterns, marked by path dependency, might be

reversed.

As pointed out by Thelen (1999), self-reinforcing mechanisms still need further specification

and theoretical development. It is therefore important to explore key issues regarding who

exactly is investing in particular institutions and what dynamically sustains these institutions

over time. This allows for an approach that includes both actors and structures (Meyer &

Schubert, 2007; Thelen, 1999).

Stability: the Influence of Structure and the Process of Structuration

Institutional reproduction processes, which result from self-reinforcing dynamics, eventually

became stabilized or institutionalized in a third phase that characterizes path dependency and

26 The author uses path dependency to discuss deviant cases of two kinds. One group refers to cases when

early contingent events set developments on a historical trajectory of change that diverts from theoretical

expectations. Another group includes cases in which outcomes are shared by other cases but lack the

causal variables normally associated with their occurrence. The cases include the industrial revolution in

England and status-based labor legislation in the US.

45

lock-in situations. At this stage, a specific trajectory of development is situated in a state of

rigidity, inertia, or decay that is difficult to reverse, hence it is path dependent. From this stage

onwards, self-reinforcing mechanisms build a regular pattern or routines which are to be

expected. In other words, this stage of path dependency emphasizes the influence of structure on

outcomes.

The structural conception highlights people’s actions as rational reactions to exogenously given

structures in their environment (i.e. the material surrounding) that dictate behavior or create a

pattern of structural constraints and incentives (Parsons, 2007). This structure compels the states

(or other relevant actors) to think of an increased revision of existing arrangements.

Nonetheless, agency is also present for locking-in a path. Here, authors base their analysis on

Giddens’ conceptual framework of structuration (Giddens, 1979; 1984).

Sydow & Schreyögg (2013: 8) point out that, from this stage onwards, self-reinforcing

dynamics build a regular pattern of degenerating or escalating side effects which are to be

expected.27

Protected by these routines, path dependency is well prepared to reject change and

defend the status quo “making it so hard to break the circle”. Furthermore, decisions are bound

to replicate the path, and agents continue to reproduce this particular outcome, which even

newcomers are ‘forced’ or induced to adopt. 28

There is still some lack of clarity in the definition of the lock-in stage (e.g. how long it is and

how it explains stability). Similarly, it is also unclear for the precision of the un-lock processes

(e.g. what is the cause of stopping or interrupting?). Considering these ambiguities, path

dependency thinkers suggest to focus on the mechanisms (i.e. the self-reinforcing processes)

and spell them out.

Path Breaking: Reversing Self-Reinforcing Mechanisms

Eventually, the lock-in situation may change through the dynamics of path breaking, giving

birth to a new phase of path termination or un-locked stage. Path breaking or un-locking is

characterized by stopping or interrupting self-reinforcing processes, changing the focus towards

institutional change. Therefore, there is again an open situation to a variety of options that

increases selectivity by actors; possibly creating a new path. Forms of governance, at national

and global level, as well as notions of institutional entrepreneurs and future expectations take on

particular relevance in a path breaking phase.

27 At this stage “the (escalating) dynamics come to an end, but the circular reproduction of the now-

routinized interaction, guided by increasingly ‘firm’ structures, carries on” (Sydow & Schreyögg 2013,

p.8). 28 In an extreme form of lock-in, alternative courses of action are no longer feasible. This dominant

pattern that gains a deterministic character has been found in technological solutions, but is not likely to

occur in social processes (Sydow et al., 2009).

46

Table 3. Main elements of path dependency and causal regimes


3.2.3 Path Dependency as a Problem of Policy Outcome

Studies of how processes get entrapped or become path dependent have recently gained

particular attention (Garud, Kumaraswamy & Karnøe, 2010; Meyer & Schubert, 2007; Sydow

et al., 2009; Sydow & Schreyög, 2013). Particularly, since the operation of self-reinforcing

mechanisms help to explain the gaps of political control. Sydow & Schreyögg (2013) refer to a

theory of self-reinforcing dynamics and remark their possibly ‘devastating’ impact on

organizations and society in general, explaining puzzling results such as rigidity, inertia, and

decay (e.g. explaining ongoing debt crisis).

Furthermore, as long as routines or self-reinforcing mechanisms involve actors, they are subject

to unexpected reactions. 29

On the one hand, routines have a fixed side as overarching pattern,

on the other hand, they involve some variation when performed (Sydow et al., 2009). These

aspects are at the core of path dependency dynamics, but also of institutional change.

29 Routines are defined shortly as familiar patterns of behavior (Hall & Taylor, 1996).

Phases of path

dependency

Main elements Theoretical predictions or causal regimes

Genesis / pre-formation Agency / Contingency Open situation for decisions (several alternatives are

possible), but they are historically embedded (i.e. with

inputs from the past) and contingent (i.e. unforeseeable

consequences of purposeful action)

Emergence / path

creation

Critical juncture

(Agency)

Critical juncture triggers increasing selectivity,

contingent or mindful choices are made triggering self-

reinforcing dynamics. As long as decisions are made,

the number of alternatives is reduced and choices,

while still possible, are essentially constrained

Reproduction Self-reinforcing dynamics

(Agency)

Further restriction of the scope of action. Decisions

produce tapering processes and a loss of flexibility lead

by self-reinforcing dynamics: learning effects, economies

of scale, power relations, increasing legitimacy, etc.

Stability / path

dependency

Self-reinforcing routines

(Agency)

Self-reinforcing dynamics built a regular pattern of

degenerating or escalating side effects, which are to be

expected. The (escalating) dynamics come to an end,

but the circular reproduction of the now-routinized

interaction, guided by increasingly ‘firm’ structures,

carries on

Path breaking or un-

locking

Agency / Contingency

(Future expectations)

Stopping or interrupting self-reinforcing processes,

changing the focus to institutional change. Therefore,

there is again an open situation to a variety of options

that increase selectivity by actors

47

Although self-reinforcing mechanisms are dynamic processes or sequences that provide agents

and organizations with a “positive” feedback at the beginning of a path, the problem with these

routines emerges later. According to Berthod & Sydow (2013, p. 208), in the short-term “paths

enable as much as they constrain”, but the effect becomes problematic on the long run.

Mahoney (2000) also states that the flip side, in the long-term, is that, over time, the whole

process becomes irreversible and is more difficult to select the previous available options or to

transform the pattern, even if other alternatives would have been more “efficient”.

Debates regarding the conceptualization of “efficiency” outside market conditions are evidenced

in the literature, mostly, since efficient results could co-exist with high inequality or low

legitimacy (Liebowitz & Margolis 1995; David, 2001; Boas, 2007). Arthur (1994) and Pierson

(2000) suggest leaving the issue of efficiency aside from the theory of path dependency. Boas

(2007) also considers the debate over efficiency less important, for political science, since there

is no common assumption, in the discipline, on efficient outcomes.

Yet, Sydow et al. (2009) consider that, from a strategically future-oriented viewpoint, referring

to puzzling persistence or rigidity means potential (or latent) inefficiency. Within the present

research, the term ‘inefficient’, as well as ‘suboptimal’, are used loosely in a path dependency

context to designate institutions that generated unintended and sometimes undesired

consequences. Specifically, they account for institutions that produce a gap between policy

expectations and policy outcomes.30

According to Pierson (1996), historical institutionalism emphasizes how the evolution of rules

and policies, along with social adaptations, create and increase structured polity that restricts the

options available to all political actors. These aspects mark a crucial difference with

neofunctionalist views of political control as a zero-sum. This occurs because functionalism

considers gaps or losses (between expectations and outcomes of policy implementation),

theoretically, unproblematic since transaction costs economics describes two mechanisms to

restore efficiency: competition and learning.

However, both mechanisms are of limited applicability “when one shifts from Williamson’s

focus on firms in private markets to the world of political institutions” once single unintended

effects may be quite large and processes may be path dependent (Pierson, 1996, p. 141).31

Transaction cost economics assumes that institutions and behaviors evolve through some form

of efficient historical process that moves rapidly to a unique solution: “Analysts typically look

only for synchronic determinants of policies –for example, in current social interests or in

30 In any case, calling a lock-in “inefficient” always implies a base of reference –a comparison with other

standard (Sydow et al., 2009, p. 695). 31 In reference to Williamson, O. E. (1993).

48

existing political alliances” (Pierson, 1996, p. 131). While the central idea for Pierson (1996) is

that the context is not fully controlled by actors (even collectively), the basic information for

decision-making within processes of institutional building is localized and depends on specific

contexts.

In summary, the problem of political outcome emerges not only from decisions that result in

‘inefficient’ or ‘suboptimal’ burdens later on, but mainly from creating a situation that actors

find difficult to reverse (i.e. a lock-in that is self-reinforcing), even when the context has

changed (Pierson, 1996; Hall & Taylor, 1996). Such difficulties escalate as initial choices

encourage the emergence “of elaborate social and economic networks, greatly increasing the

cost of adopting once-possible alternatives and therefore, inhibiting the departure from a current

policy path” (Pierson, 1996: 145).

3.3 Efficiency, Political Power and Legitimation Mechanisms

This section refers to Hall & Taylor’s (1996) and Mahoney’s (2000) broad formulation of

mechanisms that differentiate the calculus approach, the cultural approach, and the asymmetries

of power.32

Accordingly, the present study clusters self-reinforcing mechanisms in three forms:

efficiency mechanisms, political power mechanisms, and legitimation mechanisms. Since there

are different ways to conceptualize path dependency mechanisms, three considerations are

highlighted.

First, the focus is on self-reinforcing dynamics, rather than ‘reactive sequences’, or similar

patterns that merely describe institutionalization, institutional persistence, imprinting, or

structural inertia. As mentioned previously, these social processes can be analyzed through the

lens of path dependency, though they are not necessarily a path dependent process (Sydow et

al., 2009; Berthod & Sydow, 2013). As pointed out by Mahoney (2000) self-reinforcing

processes exhibit increasing benefits with their continued adoption, while reactive sequences are

chains of temporary ordered and causally connected events.

Second, for the analysis of policy problems in the Costa Rican energy sector, I consider that

having three competing categories of efficiency, political power, and legitimation is the most

assertive way to examine self-reinforcing mechanisms and their possible reversal. Path

dependent theorists, such as Hall & Taylor (1996), Mahoney (2000), Meyer & Schubert (2007),

32 Mahoney (2000) has attempted to categorize four possible forms of mechanisms of reproduction:

Utilitarian, Functional, Power, and Legitimation.

49

among others, categorize mechanisms similarly, identifying related societal forces. Moreover,

they are based on general explanations used in social sciences.33

Third, in the present study, they are grouped in this way seeking to systematize and monitor

theoretical competing predictions in the empirical stage of the research. For instance, functional

and utilitarian logics, proposed by Mahoney (2000), are gathered into one category of efficiency

which integrates the calculus approach from individual (i.e. in the form of personal profit

motivations) and systemic logics (i.e. in the form of efficient functional assessments). This

distinction is further clarified during the data analysis.

3.3.1 Efficiency Mechanisms

Efficiency mechanisms are derived from the calculus approach affecting individual or

institutional actions by altering expectations of an actor regarding the actions of others. From

this perspective, the individuals are ‘utility maximizers’ and strategic interaction clearly plays a

key role. In this category of mechanisms, one could also integrate Mahoney’s (2000) functional

mechanisms of systemic reproduction. Therefore, according to efficiency explanations, an

institution is reproduced through the rational cost-benefit assessments of actors or because it is

justified as functional for an overall system. Institutional change may occur when it is no longer

in the self-interest of actors to reproduce a given institution or because an exogenous shock

transforms the system’s needs.

Drivers of efficiency are explained by economies of scale, learning effects, adaptive

expectations, coordination effects, network externalities, and complementary effects (drawing in

particular on Sydow & Schreyögg 2013). As a common denominator, the criteria to expand and

reproduce the same procedure is decreasing cost per unit, increasing profitability and efficiency

gains. Therefore, these mechanisms are included in the rational cost or utilitarian logics.

Among them, economies of scale are one of the best known self-reinforcing dynamics. It takes

aim at evermore returns by expanding the volume and reproducing the output, which is also

related to fixed and sunk costs resulting from large investments. Other examples could be

learning effects, by which efficiency is gained when executing subsequent iterations (e.g. with

skillful gains increasing returns). Meanwhile, coordination effects produce efficiency gains from

rule-guided behavior when more actors adopt and apply a specific institution (i.e. a law, a norm,

a routine, etc.).

33 Mahoney’s categories are “loosely” following Collins’ (1994) work, “Four Sociological Traditions”.

50

3.3.2 Political Power Mechanisms

According to political power mechanisms, an institution is reproduced because it is supported

by an elite group of actors that benefit from the existing arrangement, even when most

individuals or groups prefer changing it. The self-reinforcing processes might work when the

institution initially empowers a certain group, at the expenses of other groups. The favored

group then uses its additional power to expand the institution even further, which, in turn,

increases the power of the advantaged group, and so forth. Inherently, conflicting processes of

institutions may eventually give way to institutional change, in which case, there is a weakening

of the elites and a strengthening of subordinated groups.

This approach fits in with the actions of “successful institutional entrepreneurs”, as agents of

change, introduced by DiMAggio (1998) and incorporating political power struggles (this is

discussed in the following section). Similarly, the “mindful contributions of powerful actors”

(Meyer & Schubert 2007:24) are emphasized in approaches of path creation or institutional

change. In the classical version of path dependency, historical institutionalists direct their

attention to the asymmetries of power (Hall & Taylor 1996).

According to this view point, the power relations present in existing institutions give to some

actors or to some interests more power than to others in regards to the creation of new

institutions. They tend to emphasize on the way in which some groups lose out while others

gain. In social interaction contexts, even subordinated groups can influence their superiors using

resources. For example, Sassen (2007) uses the concept of ‘embeddedness of the global’, in

which collectivities or groups internal to states, but strongly integrated into international

networks like transnational corporations or social organizations, might also have a

transformative power.

3.3.3 Legitimation Mechanisms

The legitimation mechanism weighs in on individuals’ routines or familiar patterns of behavior.

Self-reinforcing mechanisms from legitimation operate when an institution is reproduced

because actors believe it is morally just or appropriate, although this institution may be less

consistent with the values of actors than previously available alternatives. Institutional forces of

legitimation include rational myths; a knowledge which is legitimated through the educational

system and by the professions, public opinion, and the relevant laws (DiMaggio & Powell,

1991). Institutional transformation is, thus, located with changes within the values and moral

codes concerning what is considered appropriate, rationalized myths, declines in institutional

efficacy or stability, or the introduction of new ideas on behalf of political leaders (Mahoney,

2000).

51

The legitimation framework of path dependency is linked to the cultural approach of

sociological institutionalism. This mechanism stresses individuals’ routines or familiar patterns

of behavior. It goes beyond the considerations of efficiency and follows an appreciation of the

role played by collective processes of interpretation and concerns for social legitimacy. Any

individual can transform institutions that are “taken-for-granted”, but these institutions resist

because they actually structure the choices of reform and bind individual’s worldview (Hall &

Taylor 1996).

At organizational levels, legitimation is also a driver of path dependency. In order to gain

legitimacy, organizations are tempted or constrained to follow the rationale of institutions,

structuring their field and thereby, optimizing their access to the resources they require (Sydow

& Schreyögg 2013; DiMaggio & Powell, 1991). This formal organizational structure not only

reflects technical demands and resource dependencies, but also the fact that they are shaped by

institutional forces of legitimations mentioned above.

Nevertheless, there are debates that arise over the sources of institutional pressures, most

notably concerning where rational myths come from, the way in which practices travel and

circulate, and which are the primary sources of legitimacy (DiMaggio & Powell, 1991). This

perspective fits in with global governance approaches studying the influences of global norms,

further discussed in the following section.

3.4 Elements of Path Breaking and “Imagined Futures”

Path dependency is recognized to have a wide explanatory power (Mahoney, 2000). Similarly,

self-reinforcing mechanisms (SRM) are a powerful explicatory tool of path dependency.

Nevertheless, and in order to avoid determinism, this research complements the study of SRM

by the incorporation of agency aspects in the form of governance concepts, at a national and

global level. In addition, attention is given to their future expectations in influencing decisions.

3.4.1 Governance at a National and Global Level

Governance is broadly defined as the joint contribution of public goods by state and non-state

actors (EUISS, 2010). Forms of governance are central to this research, since governance

impacts institutions and actors’ decisions (Pierson, 1996; Börzel & Risse, 2010). On a national

level, institutionalization processes not only concern the state. Within the constellation of actors,

this research focuses on institutional entrepreneurs. Institutional entrepreneur actions and

strategies may also take the form of mechanisms applied to path dependency and path breaking

approaches (e.g. efficiency, political power and legitimation).

52

On a worldwide level, the global governance discourse stresses the growing importance of

multi-actor constellations in inter- and transnational politics, in different processes of norm

building, mainly through international cooperation (Hein, Bartsch, & Kohlmorgen, 2007). With

a focus on global governance, international practices include multilateral agreements and other

governance functions, such as information-sharing, in steering capacity building and

implementation, as well as rule-setting (Andonova, Betsill & Bulkeley, 2009).

Institutional Entrepreneurs

DiMaggio (1998) introduces the role of institutional entrepreneurs to the analysis of institutional

formation. Theories studying institutional change (and path dependency) are considered to

suffer macro biases that impair the recognition of human agency and interest in institutional

change (Colomy, 1998; Fu-Lai Yu, 2001). Thus, how is it possible to develop new paths and

institutions when institutions themselves (as constraints) define both, incentives and outcomes?

(Colomy, 1998).

The concept of institutional entrepreneurs contributes to reducing those macro biases of

structure over agency. Moreover, it also provides a category to differentiate between emergent

events behind actors (e.g. external shocks) from actors’ intended and deliberate actions (e.g.

pursuing incentives). Consequently, their moves or actions can be strategic, pursuing their own

interests and projects; or action-orientated towards communication and mutual comprehension

(Breit & Troja, 2003). Their responses can be creative (radical) or adaptive from namely

extraordinary and ordinary entrepreneurs (Fu-Lai Yu, 2001); and their projects can be

considered to be totalizing, reconstructive, or elaborative, depending on the level of institutional

alterations (Colomy, 1998).

Therefore, institutional entrepreneurs are actors who have interests in institutional change, but

rarely possess the resources, power, and legitimization necessary to implement their program.

The institutional entrepreneur, along with its “innovative project”, is also embedded and

strongly influenced by social relationships of power, coalitions, and conflicts involving

institutional change (Colomy, 1998; Breit & Troja, 2003). For this reason, the

institutionalization of their “entrepreneurial project” usually requires the assent of various

groups and the use of strategies to enlist support and defuse resistance.

Under exceptional circumstances, resource-poor entrepreneurs can, however, serve as effective

change agents vis-à-vis mass defiance. For example, their project might succeed when rapid

economic and social transformations undermine political stability and render uncertain

relationships between political leaders and their constituencies (DiMaggio, 1998). According to

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this theory, successful entrepreneurs are overrepresented by elites and secondary elites,

powerful state actors, and professional groups (DiMaggio, 1998; Colomy, 1998).

Concerning the strategies to enlist support and defuse resistance, Colommy (1998) describes

two examples. One is based on institutional entrepreneurs that are estimating probable success

and the other on institutional entrepreneurs adapting to contingencies. In the first case, strategic

actions result from entrepreneurs’ rational assessment of their tactics via estimation of costs,

opponents’ responses, and probable success. In the second example, it is possible that

entrepreneurs display strategic actions from a repertoire of collective actions (with a preference

for familiar strategies) in order to mobilize support.

Those strategies also link the micro-level actions of agents with outcomes at the macro-level

when they impact institutions (Colomy, 1998). Similarly, from a technological path perspective,

Meyer & Schubert (2007) analyze empirical cases where the constitution of a technological path

is the result of different levels of actor involvement and diverse strategies. In addition, the

authors also consider related strategies of calculating chances of success; situations of

companies with sufficient funds that partake in various competing strategic alliances; and also

cases of conflicting or competing perspectives.

Therefore, institutional entrepreneur actions and strategies are relevant at the path breaking

stage, potentially reversing self-reinforcing mechanisms (e.g. utilitarian or calculus

explanations, legitimation, etc.). Since self-reinforcing dynamics are at the core of path

dependency, Sydow et al. (2009) point out that the first step in any path breaking intervention is

not only to reflect on the fact of being path dependent, but also on the drivers that make this

happen. This also depends on the character of the self-reinforcing dynamic itself.

For instance, reversing mechanisms of political power involving inherent contradictions is more

plausible than transferring learning effects from one specific field to another. Moreover, Sydow

et al. (2009) refer to the additional efforts needed for the restoration of choices, similar to a

possible costly subsidy helping the new alternative to catch up to the existing one. Coordination

effects might be different since the driver depends a great deal on the willingness to conform to

rules and also to reduce uncertainty about others actions.

Conversely, Mahoney (2000) highlights the reversing logics of self-reinforcing processes as

elements of change. According to his explanatory modes (e.g. utilitarian, functional, power and

legitimation), elements of change may also derive from declining actors’ self-interest, inherent

power contradictions, or waning legitimacy on institutions. In the case of systemic logics (i.e.

functional explanations), change arises as an exogenous shock transforms the systems’ needs.

54

Furthermore, mindful deviation is not a solitary act (of institutional entrepreneurs) but a long

lasting process of continued path creation and activity establishment (Meyer & Schubert, 2007).

It involves the mobilization of different resources like “minds” and “time” and the accumulation

of inputs from multiple actors. As in the case of technological development, the “entrepreneurial

agency is distributed across multiple actors” (Garud & Karnøe, 2003, p. 277). However, it is not

guaranteed that the path is in any way consistent with the intentions of the actors responsible for

its development.

Global Governance

Governance approaches, at a global level, provides social elements to the study of institutional

building. These approaches also introduce more systemic dynamics into the analysis of path

dependency, while still keeping an eye on the actors’ role. Several authors agree that, besides

material resources such as financing, social resources like norms, ideas and changes in practice

should be also incorporated into the analysis of path dependency (Pierson, 1996). Pierson (1996,

p. 146) talks about the acquis communautaire as the corpus of existing legislation and practice,

that influence behavior.

This structure obliges the states (or other relevant actors) to think of an ever increasing revision

of existing arrangements. The author distinguishes two forms of governance impact, one as an

institutional framework, and the second influencing current decision-making. Therefore, it is

possible to say that “governance consists of both structure and process” (Börzel & Risse 2010,

p. 114).34

Within global governance literature, governance is largely defined in contradiction to hierarchic

power politics, traditionally associated with anarchy, emphasizing instead cooperation, solving

common problems and, generally, dealing with transnational threats (Corry, 2010).

Alternatively, Corry (2010, p. 170) argues that a global polity exists whenever a set of actors are

oriented towards the governance of one or more common governance-objects, “regardless of

who or what is doing the steering and whether it is done inside, outside or across states […] not

necessary for ‘steering’ to be consensual or technocratic”. Hence, this concept proposes a more

‘generic steering’, consensually or antagonistically.

However governance is also a contested concept regarding the state’s centrality. According to

Bell & Hindmoor (2009), states or governments do not give-up their rule-setting role while

entering partnerships and alliances with other actors. This also is related with theory critical

34 This affirmation relates to the concept of practice or international practices, defined as “socially

meaningful patterns of action, which in being performed more or less competently, simultaneously

embody, act out and possible reify background knowledge and discourse in and on the material world”

(Adler & Pouliot, 2011, p. 4).

55

analysis regarding the role of the state in a context of globalization (e.g. Cox, 1981, Sassen,

2007).

Moreover, transformations also occur transnationally and within the states. According to Sassen

(2007), the aims are to identify the origins of transformative character and potential historical

phenomena, rather than assuming that states are subject to limited changes (problem-solving

theory) biased by the framework of states functioning on the whole. In her book “A sociology of

Globalization”, Sassen explains how states become embedded in the emerging transnational

governance system. She uses the concept ‘embeddedness of the global’, meaning that states

have been a key agent facilitating global processes, and at the same time, states have emerged

altered from them.

Besides states, transformative impetus could also be initiated by societal actors. For example,

Zürn (2004) analyses the effectiveness of state policies, affected by a context of accelerated

globalization, shifting the ultimate addressees of regulations issued by international institutions

(e.g. the United Nations) from states to societal actors. The author identifies a mechanism that

produces legitimacy problems defined as reflexive denationalization.35

This mechanism is linked to “political denationalization” (i.e. an increase in the number and

political scope of international institutions) as a response from governments and other political

organizations to the challenges of globalization (i.e. societal denationalization). The process

becomes reflexive when society and political actors begin to comprehend those changes and to

reflect on the features of a legitimate and effective political order beyond national borders.

Thus, it also becomes politicized, “the politicization of world politics”, which increases the need

of a normative and descriptive perspective to legitimize such international institutions (Zürn,

2004, p. 277).

3.4.2 Future Expectations and imagined futures

History does not only matter, within a context of financial crisis, global environmental risk and

dwindling fossil fuel supplies, but the future as well (Beckert, 2014). Cooper (2010, p. 175)

notes that all of these events are connected by notions of a world of “unexpected turbulence”

that has to be predicted or planned. With regards to notions of path dependency and path

35 The first stage of this mechanism is a more or less unintended side-effect or indirect outcome marked

by supranationalization and transnationalization as responses to perceived functional demands on

international institutions. In the second stage, the process becomes reflexive (i.e. “reflexive

denationalization”). Transnational protests, such as those in Seattle 1999, and the rise of resistance against

international institutions, within national political systems, can be explained as part of the process of

reflexive denationalization.

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breaking, theories of expectations highlight the significance of actors’ perceptions of the social

world.

Theorists of path dependency would generally argue that change would occur through

unforeseen exogenous forces, some, may incorporate an “insidious change” or “mindful

deviation” of new members or actors involved, others may be a by-product of other

organizational decisions. Taking a step further, change may also occur by the deliberate support

of the same actors involved (Mahoney, 2000; Meyer & Schubert, 2007; Sydow et al., 2009). In

all cases, dealing with actors’ decisions, in contexts of uncertainty, might involve a level of

prediction. 36

Expectations have been commonly used in the rational expectations model, in economics, that

views rationally calculating actors as making decisions on the basis of the expected future

revenue stream (Hoover, 1997; Beckert, 2014). 37

This aspect is in stark contrast to sociology,

which perceives current events as a final outcome emerging from the past, similar to path

dependency approaches. To bridge this gap, the author proposes a model of fictional

expectations that highlights the significance of actors’ perceptions of the social world.

Consistent with the notion of fictional expectations, present day action is not only the ultimate

outcome of past events, but also an outcome of perceptions of the future. Since the future is

unforeseeable, expectations cannot be determined through the efficient use of available

information, as in rational expectations theory. Expectations are, instead, contingent on the

actors’ interpretation of the state of the world; they may differ between actors and may change

in unpredictable ways over the course of time.38

Not unlike other mechanisms, expectations also enter into the analysis of reversing self-

reinforcing dynamics. On the one hand, the rational expectations model is linked to efficiency

explanations applying the probabilistic calculation/calculus approach. On the other hand,

political power and legitimation accounts can also be contained in fictional expectations.

As stated by Beckert (2014) and Cooper (2010), actors have an interest in influencing

expectations (e.g. through official discourses, marketing, beliefs, confidence, and trust),

36 Action takes place on the basis of projections that are described as “projects”. A project is a plan or a

potential way of acting that actors believe will deliver specific yields. Projecting is then anticipating before performing an action and is used by actors to take themselves into an imagined future in which the

action will have been completed (Beckert, 2014). 37 Rational expectations theories were developed in response to perceived flaws in theories based on

adaptive expectations, which gives importance to past events in predicting future outcomes. To explain

decision-making, the main assumption is that all actors are efficient in processing information, but also

that information relevant for the future is available in the present, and that statistical extrapolation of

future events is indeed possible from the past (Beckert, 2014). 38 The calculus probability is applicable to predictable risks but not to uncertainties when the events

possess a uniqueness that denies such prediction (Beckert, 2014).

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especially if decisions have distributive consequences. Therefore, powerful actors can influence

expectations and shape the imagery of consumers, voters, etc. By not being bound to a rational

calculation, fictions do not have to be true, but convincing.

According to these authors, “imagined futures” influence the interpretations of a given situation

in a context of uncertainty. Likewise, fictional expectations are mental representations of the

future state of the world by which actors motivate their actions and organize their activities. This

openness to the future is simultaneously perceived as a threat to stability (i.e. a cause of

economic crisis and a loss of control producing damage and anguish) and a space of promises

and hopes (i.e. creative change in the economy). Risk and the notion of an open future

conceptually are tied together and come into broad use in a society that is future-oriented.

Cooper (2010) remarks that instruments within this logic of anticipation, such as new

forecasting techniques and novel financial instruments, are widely used. They are aimed at

responding to unpredictable weather fluctuations. The most popular derivatives have been

temperature-related and have been designed for energy producers who may be adversely

affected by unanticipated weather swings. 39

Fictional expectations and potential world philosophy also produce a different response to

uncertainty by centering the role of imageries within decision-making. Discussing the future in

present day decisions is then a step further that complements the analyses of path dependency.

These issues also open an interesting venue for research and a field for further theory

development by bringing future expectations into the analyses of present day decisions.


Within this research, the key propositions explaining institutional inertia and decay are based on

the formalization of the concept of self-reinforcing processes derived from path dependency

theory. The latter is considered the ideal way to approach the case study under investigation.

First, self-reinforcing mechanisms are deemed the direct causes of inertia and loss of flexibility.

Second, they are the theory’s main feature and the most developed element from a theoretical

perspective.

39 Those techniques include traditional projections or carbon cap-and-trade systems, and newer ones such

as catastrophe bonds, securities, and other environmental derivatives. In the context of the first oil crisis,

strategists associated with French petroleum companies, Shell and ELF, began experimenting with new

forecasting techniques such as scenario planning. Cooper (2010) notes that designers of those techniques

sought to develop a mathematically rigorous method that nevertheless built on the non-quantitative and

emotional dimension of our relation with future. The author establishes a relationship between ‘delusion’

and imperialism.

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Besides self-reinforcing processes, agency is another element of path dependency. Agency is

broadly active, in the early phases, as well as in later stages of path breaking; however, agents

are present throughout the whole process. Other elements, such as contingency, are more

ambiguous though still relevant.

Path dependency is, by definition, a posteriori phenomenon since the outcome cannot be known

unless the process has been formed. Nevertheless, further research on institutional development

has sought to move away from the concept of path dependency, focusing on the ways in which

institutions change rather than remain stable over time. The aforementioned elements of path

dependency are also key factors explaining path breaking.

The hereby research resumes discussions on agency-structure in path dependency and path

breaking theories and incorporates two additional elements: governance approaches, at a

national and global level, and future expectations. Theoretical features from these elements

allow reducing macro biases of the path dependency theory. They also help to explain who is

investing or interested in particular institutions and what dynamics sustain them.

Furthermore, the value added, by their incorporation, in the theoretical framework is high since

specific components and actors concerned with energy have a clear notion of future challenges

(i.e. institutional entrepreneurs). Similarly, a high propensity to change is derived from greater

interaction within global dynamics (and forms of global governance). The expectations issue is

also at the core of path dependency as a problem of policy outcome, as long as outcomes divert

from political expectations. The theoretical framework provides such conceptualization of the

theories that will support the explanations of the Costa Rican case towards carbon neutrality by

the year 2021.

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4 Methodological Approach: Qualitative Within-Case Analysis

4.1 Introduction

This chapter is divided into five sections including the introduction. Section 4.2 presents the

formulation of hypotheses. Section 4.3 explains the usefulness of institutional analysis and

process tracing methods. Section, 4.4 focuses on data collection methods, the fieldwork

experience and the instruments used for the analysis of information and explanation

assessments. The last Section 4.5 summarizes the methodological approach and states some

concluding remarks.

The objective is to explain the methodological approach used in this research, which is based on

a within-case analysis using a ‘mechanism-centered approach’ with the purpose of explaining an

intriguing outcome: why Costa Rica chose to have limited utilization of alternative renewable

sources, above all solar energy, to achieve the goal of carbon neutrality in a context of declining

hydroelectricity contribution, while (expensive and polluting) fossil fuels such as petrol and

natural gas, gain relevance in future scenarios. In this sense, the methodological approach

followed in the present study is framed with no intention of generalizing to the broader

population of cases. 40

Costa Rica’s sustainability challenges, regarding electricity production, are not unique.

Alternative renewable energy transition problems are challenging countries all over the world.

Nevertheless, this particular case is noticeable because Costa Rica is not a wealthy,

industrialized country with the necessary amount of resources to invest in capital intensive

renewables; it has a small energy market, but it does not rely completely on hydroelectricity; it

is commanded by a state-owned firm, which in developing countries are considered inefficient

and risk adverse; and despite the fact that the country has proven oil reserves, it has refused this

kind of investment (Wilde-Ramsing & Potter, 2008).

These characteristics imply that Costa Rica’s electricity system could also be framed as a crucial

case for theory testing.41

Whichever the policy outcome, the goal under analysis is provided by

history and is closely tied to the country’s particular characteristics. Hence, this is not defined

by social constructions of classes of events, nor by data set observations.

40 According to Gerring (2006) this form of idiographic research implies that a study focuses on the

unique qualities of the case, while case studies reflect upon a larger population (nomothetic). 41 The Costa Rican energy system can be framed as a least-likely case of path dependency, because in

spite of lacking the theoretical conditions required to develop self-reinforcing sequences, the endurance of

the electricity trajectory is more likely than expected.

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This does not mean that theory is set aside. Similar to historical explanation, within-case

analysis uses observations on context, processes, or mechanisms (i.e. process tracing), and

draws on theories to explain each important step that contributes to causing a particular outcome

(Bennett & Checkel, 2012).

According to Van Evera (1997), a historical explanatory

dissertation uses theory (academically, folk theory, or common sense deduction) to explain the

causes, patterns, or consequences of historical cases (theory-applying).

4.2 Formulating Hypotheses

In the specific case of Costa Rica’s energy system, the declaration of the country’s carbon

neutrality goal coincided with natural constraints affecting hydroelectricity, which has been

vulnerable to changing weather patterns. The long-standing sector institutions responded

accordingly using fossil-fueled plants as back-up. As a result, electricity production from oil

plants increased in the following years, thus hiking electricity prices and moving away from

carbon neutrality goals.

The historical data of electricity production, since the 1970s, evidenced an episode of

substantial institutional change, followed by inertia of previous patterns. This occurred in the

1990s, when alternative renewable energy sources (i.e. geothermal stations, wind energy and

biomass stations) were incorporated into the grid to a limited extent. From the options available,

solar energy was excluded from alternative renewable sources in this period.

Although renewable energy use has been considered to withstand the test of time in Costa Rica,

the 21st century began with a gap in the renewable energy system, which turns out to be

growing and unbreakable. Installed capacity from fossil plants grew, while the use of alternative

renewable sources remained limited. The evidence of a progressive exhaustion of Costa Rica’s

energy model is not only in terms of renewable energy responses, but also in addressing the new

paradigm of civil society participation in decision and production processes.

Two questions emerge from Costa Rica’s energy system developments: (1) why was there no

significant support in the past for the active incorporation of solar energy within the Costa Rican

energy system, while technologies like geothermal energy and wind parks gain attention; and

(2) why has there recently (2010-2014) been an increasing interest in solar energy and how is it

translated into policies transforming the national energy system to supplement other sources to

reach 100 percent renewable electricity generation and carbon neutrality by 2021.

The first intuitive explanation of this phenomenon refers to the cost or higher relative prices of

alternative technologies. Nevertheless, this explanation is in contrast with historical evidence

stating that prices are not necessarily the only factor contributing to change. Even in periods

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when oil prices have reached the lowest levels during the 1990s, Costa Rica stayed true to its

model in which nearly ninety percent of the electricity generated was from renewable sources.

Moreover, the Costa Rican electricity sector is not a market regime, but rather a mixed model

under state control. The country has a long history of institutional development based on the

figure of “autonomous institutions”, such as the Costa Rican Electricity Institute (ICE), who

also became a political actor. Furthermore, reaction to shocks (e.g. climatic events) might

produce circumstantial (contingent) adaptations or fundamental transformations.

Therefore, competing explanations of the sector’s inertia emerged from different paradigms.

Following the argument of path dependency seems to be a reasonable way to perform the

phenomenon of technological and institutional inertia. Within this argument, input’s price

incentives or interest groups, established earlier in the past, might have produced changes in a

trajectory that later on becomes difficult to reverse (according to early conceptualizations of

path dependency).

This statement is subject to analysis in the present research. In doing so, the procedure proposed

by Van Evera (1997) to test possible explanations is employed. This starts by inferring

predictions or hypotheses from the explanation and then asking if these are confirmed or

disconfirmed by evidence over time. Accordingly, three (causal) hypotheses, derived from the

case using solar energy as an example among restrained alternative renewable carriers, are

formulated:

- Hypothesis one: Compared to solar energy, hydroelectricity is the cheapest and most

efficient option available according to actors’ cost-benefit assessments that are either driven

by individual profit motivations (individual level) or systemic goals (macro level).

- Hypothesis two: Hydroelectricity developments are supported by elite groups that benefit

from existing arrangements in spite of claims from (subordinated) groups of actors that

prefer the expansion of solar energy installations.

- Hypothesis three: Actors believe that hydroelectric developments, rather than solar energy

installations, are appropriate and morally just for the provision of electricity.

Accordingly, in the next step of this dissertation, the formulation of hypotheses is contrasted

with empirical facts in different periods of time. In this regard, the following indicators are

considered:

a) Different actors’ accounts

b) Different periods of time

c) Different technologies

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d) Other indicators: technology relative cost, global and national discourses or policy

statements, and natural conditions or climatic events.

Although, those hypotheses are pondered as competing explanations, it is possible that their

long term effect is rather complementary. Each hypothesis is related to theoretical concepts of

efficiency, political power, and legitimation, respectively. Hypotheses and theory are used to


operate. The procedure follows an inductive-deductive approach and is guided by methods of

institutional analysis and process tracing. These methods are explained in the following section.

4.3 Combining Methods: Institutional Analysis and Process Tracing

From an ontological and epistemological perspective, the methods used in this research (i.e.

institutional analysis and process tracing) are linked to the scientific realistic view (positivism),

arguing that social facts exist independently of the observer and can be the subject of defensible

causal inferences (Bhaskar, 1975). Accordingly, the situation of the national energy system is

analyzed not only as result of infrastructural investments in electricity, production and

consumption patterns, but also from discourses, ideologies, and even future expectations or

“imagined worlds”. Hence, past conditions, current choices, and future scenarios of carbon

neutrality are affected by both material conditions and ideas that are transmitted in discourses,

archives, and other documentary material.

Thus, the purpose of this research is also to draw inferences that are useful for policy-making.

The process tracing and institutional analysis methods are used for testing the proposed

hypotheses. On the one hand, the process tracing method is suitable for looking at the

explanations of political administrative decisions in the energy sector over time. On the other

hand, institutional analysis is used for most of the descriptive sections, guiding the comparative

analyses for the role of alternative renewable sources, actors and period of time.

4.3.1 Institutional Analysis Method

As discussed in the theoretical chapter, institutional analysis has developed different

perspectives to study the relationship between actors and institutions. In this field, scholars

increasingly conceptualize actors and institutions as being mutually constitutive of one another.

As Pierson (1996; 2000) suggests, actors are relevant in the continuation of institutions through

processes in which they are immersed, but are beyond their control.

In the case of Costa Rica, the utility of seeing institutions and actors as a dynamic process is in

accordance with the persistence of well-established institutions in the national electricity sector.

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They include relevant actors that support different types of energy developments over time, such

as the ICE and the Energy Planning Sector. Thereby, the integration of structural forces (e.g.

power relations), besides rational choice models developed at individual level are needed as

well.

Hence, the institutional analysis developed by neo-institutional approaches or actor-centered

institutionalism (e.g. Mayntz & Scharpf, 1995; Scharpf, 1997) is important in the present study.

This approach is guided by two paradigms of action-theoretic (or rational-choice) and

institutionalist (or structuralist) theories (Scharpf, 1997). In this way, and in order to avoid

determinism and allowing for new forms of social practice to emerge, aspects of agency and

interest within institutional change are incorporated in the analysis based on Scharpf’s

conceptual framework, illustrated in Figure 1.

Figure 1. Actor-centered institutionalism approach

Source: Scharpf (1997)

Actor-centered institutionalism is combined with path dependency theories to analyze

technological patterns within institutions. Firstly, it highlights the role of agents in the processes

of technological change. Secondly, it draws a relationship between the institutional setting (i.e. a

combination of social and natural environments), actor interactions, and policy outcomes.

The method of institutional analysis consists of identifying the problems, as well as antagonist

and consensual interests from different players and the relevance of institutional entrepreneurs

(i.e. actors’ constellations capabilities). It also provides a tool for a detailed description of the

changing conditions, over time, concerning the institutional setting or the policy environment.

Description is a crucial element for the current within-case analysis. Following Van Evera

(1997), historical cases often provide a good deal of description but their focus is on explaining

what is described. The description part establishes data points, while explanation expounds the

structure of data that has already been described (e.g. what elevated the oil prices). Therefore,

description must often precede explanation or evaluation, since phenomena that have not been

64

described cannot be clarified or assessed. Consequently, description, in the hereby research, is

guided by the method of institutional analysis.

At the same time, the relationship between institutions and actors points out to another relevant

variable concerning their means of interaction, which is their analytical level, being that

individual, meso or macro (systemic) levels. Beach & Pedersen (2012) make a distinction

between purely macro-level and purely micro-level (i.e. action formation mechanism), as well

as micro-macro mechanisms (i.e. transformational) and macro-micro (i.e. situational)

mechanisms. The common distinction between micro foundations and macro effects springs

from such a conception of explanation (Tilly, 2001; George & Bennett, 2005). The concept of

institutional entrepreneurs is an example of those interrelations, linking the micro-level actions

of agents with outcomes at the macro-level when they impact institutions (Colomy 1998).

Furthermore, the elements contained in (causal) mechanisms depend on what type of theoretical

explanation they are dealing with. Parsons (2007) and Beach & Pedersen (2012) differentiate

four types of theoretical explanations within the social science: structural, institutional,

ideational and psychological. Similarly, Tilly (2001) proposes a rough classification of three

sorts of mechanism: environmental, cognitive, and relational.

Structural and environmental explanations coincide in referring to externally generated

influences (i.e. exogenous constraints and opportunities) on conditions affecting political action

or social life (Tilly, 2001; Parsons, 2007). The structural conception highlights people’s actions

as rational reactions to exogenously given structures in their environment (i.e. the material

surrounding) that dictate behavior or create a pattern of structural constraints and incentives.

Tilly (2001) links environmental explanations with words such as disappear, enrich, expand,

and disintegrate, applied not to actors but rather to their settings, suggesting the sorts of cause-

effect relations in question. For instance, climate change effects or national energy demands are

examples of those structural or systemic aspects relevant in the energy field.

Ideational, psychological, as well as cognitive and relational mechanisms operate through

alterations of individual and collective perception, and are characteristically described through

words such as recognize, understand, reinterpret, and classify (Tilly, 2001). Relational

mechanisms alter connections among people, groups, and interpersonal networks. Words such

as ally, attack, subordinate, and appease give a sense of relational mechanisms to identifying

mechanisms that operate at the level of the individual or small group but aggregate into larger

scale effects. Power relations, actors’ expectations, or the collective creation of myths are

examples of this more relational mechanism.

65

Parsons (2007) relates path dependency with institutional mechanisms. Institutional

mechanisms are distinct from structural ones in that institutions are manipulable constraints (i.e.

arranged rules and conventions) and path dependent (i.e. earlier choices shape later ones in

unintended ways). Typical institutional mechanisms deal with how certain current

intersubjectively institutions channel actors unintentionally in a certain direction. Path

dependency and temporal effects are emphasized within this sort of mechanisms (Beach &

Pedersen, 2012, p. 81; Parsons, 2007).42

Conversely, Beach & Pedersen (2012) consider that the relevant analytical level depends upon

the empirical manifestation of the theorized mechanism. This research is centered on

technological and institutional developments in the electricity sector, and hence, the analytical

level is closer to relational and institutional processes. Structural and environmental types are

also relevant for the analyses.

4.3.2 Process Tracing Method

In a broader sense, process tracing refers to the examination of intermediate steps in a process to

make inferences about hypotheses on how that process took place and whether and how it

generated the outcome of interest (Bennett & Checkel, 2012). These intermediate processes took

the form of a causal mechanism (CM), introduced in the theoretical chapter. Since the objective

of this research is to explain a particular outcome (i.e. Costa Rica’s restrained utilization of

alternative renewable sources, above all solar energy, to achieve the goal of carbon neutrality),

the pragmatic use of mechanisms allows to account for the important aspects of the case.

In a mechanism-centered approach, a general analytical framework is defined in terms of

outcome, conditions and CM. The outcome is that which needs to be explained (explanandum

or dependent variable) and that which contains the explanation (explanans or independent

variables), a cause, antecedent events, or other conditions that triggers specific processes or CM.

Thus, the CM is the link between the conditions (X) and the outcomes (Y) of interest, or “the

dynamic, interactive influence of causes upon outcomes and in particular how causal forces are

transmitted” (Beach & Pedersen, 2012: 40).43

According to Brady & Collier (2004), in a system-oriented approach, independent and

dependent variables affect one another.44

However, this inherent aspect of systems does not

42 Beach and Pedersen (2012) also refer to incremental causal mechanism when the causal impacts

become significant after they have been in action over a long period of time. 43 In contrast to a regular empirical association between X and Y, causality is, therefore, understood in

more complex terms as the causal mechanism linking X to Y. 44 Henry E. Brady & David Collier (Eds.) (2004). Rethinking Social Inquiry: Diverse Tools, Shared

Standards. Lanham, Md.: Rowman and Littlefield, 362 pages, ISBN 0-7425-1126-X, USD 27,95. pp.

237-242

66

restrict the identification of causal mechanisms that induce status or change. The analysis of

causal process observations is allowed by ‘bracketing’ the salient phenomena. Bracketing means

to keep the structure constant and to take a look at the activities of a group of actors that interact

with others. The advantage of within-case analysis is that the structure remains more or less the

same, facilitating the control of context variables that affect comparative analysis.

This approach is considered of great significance for this research. First, it proposes a

mechanism-centered analysis with a pragmatic use of theories. Second, it is suitable for a

historical analysis in a single case. In this sense, the present research is not theory-centered

seeking law-like empirical generalizations. Rather, a case-centric research, as described by

George & Bennett (2005), makes use of causal mechanism theories to provide historical

explanations accompanied with explicit causal hypothesis, highly specific to the case.

Figure 2. The model of explaining outcome process tracing

Source: Beach & Pedersen (2012)

Beach & Pedersen (2012) refer to this use of process tracing as “explaining outcome process

tracing”, differentiating it from other variants of the method (i.e. theory testing and theory

building process tracing). This variation of process tracing has characteristics that makes it an

ideal analytical framework to respond to the research’s question from a ‘mechanismic

perspective’. As illustrated in Figure 2, the selection of mechanisms results from an iterative

analysis between deductive and inductive paths, derived from both a theoretical level and an

empirical case-specific level.

67

Taking an inductive path, as a point of departure, process tracing begins with an empirical

puzzle in which the unit of analysis is the Costa Rican energy system and the outcome is the

restrained utilization of alternative renewable sources, challenging the attainment of carbon

neutrality. Then, moving back to the theoretical level, the main variables start to take form, in

this case the systematic CM derived from the path dependency theories. In a next step, these

theoretical elements are combined with case specific CM. The result is an eclectic theorization

of CM.

In explaining outcome process tracing, the CM includes systematic and non-systematic parts

that produced the outcome in question. The systematic parts are theory-guided and the non-

systematic ones are highly case-specific (Beach & Pedersen, 2012; George & Bennett, 2005).

This possibility implies a dialogue between theory and evidence, which according to

Rueschmayer (2003), constitutes the proportional advantage of comparative historical analysis.

The heuristic application of theorized mechanisms is used to elaborate the best possible

explanations of a particular outcome (Beach & Pedersen, 2012).

Moreover, the study of single historical cases can do much more than merely generate initial

hypotheses. According to Rueschmayer (2003, p. 307-312), while any explanation requires

theoretical premises, case centric studies can not only develop new theoretical ideas, but also

put them to the test and use the results in the explanation of outcomes. 45

Nevertheless, political

interests can also create a very strong urge to recognize and comprehend the conditions, under

which, one’s objectives can be fulfilled; what are the major obstacles, which goals must be

considered utopian, what compromises will likely impose themselves, what will be the

consequences of the reutilization of passionate commitment, and so on.

These are relevant considerations for this research because its purpose is not just story-telling

about decisions made in the country’s energy sector, but also a theory-guided analysis of causal

mechanisms and the specification of how they operate. Non-systematic elements of the

mechanism are, for example, those related with the role of the national electricity company (i.e.

the ICE) and the relationship with private actors on a national level. Some other (systematic)

parts are completed by borrowing from existing mechanisms that have a causal-explanatory

focus; the mechanisms of path dependency, for example.

Although mechanisms, by definition, have uniform immediate effects, practitioners of

mechanistic explanations recognize that their aggregate, cumulative and longer-term effects

vary considerably depending on initial conditions and on synergies with other mechanisms

45 Hypotheses, which are developed (or refined) in one case, can be tested and used as explanations in the

same case and can tend to be more counterintuitive. However, good historical explanations and especially

analytical oriented historical studies do precisely this.

68

(Pierson, 1996; 2004; Tilly, 2001). Therefore, dimensions of analytical level, contextual

specificity and temporal conditions are important to define the effect of the causal mechanisms.

In the case of path dependency, the self-reinforcing mechanisms have particular characteristics

in these dimensions.

Mechanisms of path dependency are considered, by Beach & Pedersen (2012), as one form of

institutional mechanisms (i.e. both at micro-macro and macro-micro levels) prioritizing

temporal effects. One of the main figures constituting this phenomenon are the self-reinforcing

mechanisms. They are also defined as incremental causal mechanism; the causal impacts

become significant after they have been in action over a long period of time (i.e. reinforcing an

outcome). The degree of contextual specificity of mechanisms is defined as the scope sets forth

the conditions that are necessary for a given mechanism to function (Beach & Pedersen, 2012:

82).46

Furthermore, the method of “explaining outcome process tracing”, provides the framework to

craft a minimally sufficient explanation that accounts for a particularly intriguing outcome. 47

The objective of using the explaining outcome process tracing is to assess from competing

explanations or assumptions for prediction, therefore, to exclude some (or all except one)

possible explanation. The assessment of explanations is the last part of the process tracing

method.

Even though the present research is not framing any specific test of theories or explanations, it

keeps track of what is expected by inferring predictions. Hence, keeping track of their presence

or not, as well as their changes over time. In this case, the focus of attention is on the

mechanisms explaining the lack of flexibility of the Costa Rican energy system.

The problem of equifinality (i.e. many alternative causal paths for the same outcome) is not

excluded; however, in that particular case, the failure will be spelled out.48

According to the

conceptualization followed in this research, if one mechanism is completed by the other in order

to explain the case, then the consistency of path dependency explanations is reduced because its

central figures are self-reinforcing sequences of the same mechanism. Then again, such result

would be compatible with the eclectic use of theories from historical institutionalists who

46 The context is the relevant aspect of a setting where the initial conditions contribute to produce an outcome through the operation of the mechanisms. 47 A minimally sufficient explanation is defined as an explanation that accounts for an outcome with no

redundant parts being present (i.e. no parts of the complex is sufficient); this ensures that every factor that

is part of the complex cause is an indispensable part in bringing about the effect. Historians remain

skeptical about full-scale causal accounts: History is not rule-governed, and it does not know sufficient

causes” (Thomson 1978, cited in Rueschmayer, 2003), in reference to openness of the process in question

to the “historical actors”. 48 George & Bennett (2012) defines equifinality as “many alternative causal paths for the same outcome”

(p. 10).

69

combine the ‘calculus approach’ and the ‘cultural approach’ to explain how institutions affect

behavior and why institutions persist over time (Hall & Taylor, 1996).

Moreover, the study is also aware of the difficulties in assigning causality in single case designs

because of the limitations of the evidence and the underlying assumptions. However, those

limitations are also shared by quantitative works (Rueschmeyer, 2003). When these or other

problems in crafting explanations emerge, they are clearly stated.

Generalization is not the aim of explaining outcome process tracing; therefore it is possible that

some systematic parts of the mechanisms could “travel”, but not the case-specific conglomerate.

Researchers, in the field, could also judge the findings of the particular case interested in

relation to similar puzzles affecting other countries in Latin America or other regions.

However, this research leaves “the identification of universal or quite general problems”

(Rueschmeyer, 2003, p. 330) for further research.

4.4 Data Collection and Analysis

4.4.1 Historical Review

Empirical cause-effect relations, initially observed by literature in the Costa Rican case, were

subsequently combined into the study with theoretical predictions from institutional theories in

order to draw alternative explanations. I found that it was possible that some electricity

technologies had a differentiated support, due to long-standing institutional issues, which can be

clustered in efficiency, political power and legitimation explanations. These modes of

explanation were broadly used by institutional theorists to explain status or change.

Technological and institutional patterns explaining decisions towards carbon neutrality in 2021

were studied in the historical case of Costa Rica’s energy system. The period of analysis

covered developments before 1990, during the 1990s and from 2000 to 2014. Thereby,

preliminary conditions are incorporated in actors’ perspectives towards 2021, during which the

goal of carbon neutrality should be achieved.

The procedure followed is an inductive-deductive approach and is guided by methods of

institutional analysis and process tracing. Accordingly, 47 interviews were conducted with

different groups of actors in the energy field that were complemented with written policy

documents and participatory observation for the process tracing analysis. Other secondary

sources included scholarly literature on Costa Rica’s environmental history, social movements

in the electricity sector and market reforms that were useful especially to elaborate on the

institutional analysis and the observations in the period before 1990.

70

With those premises in mind, the strategy and the instruments for data collection, during

fieldwork, were prepared. The idea was to gather empirical information from all possible energy

sources and diverse actors in order to use this as evidence to support or discard possible

explanations. The strategy is explained in the next sections.

4.4.2 The Fieldwork Experience

Objectives, Activities, Duration and Location

The fieldwork was carried out from August 2013 to October 2013, in Costa Rica, with some

additional information gathered in August 2014. The focus of the data collection was the

reconstruction of the electricity trajectory from the perspective of relevant actors and institutions

to answer the research questions. The collection of data from primary and secondary sources, as

well as expert opinions, follows the activities of the Fieldwork plan, scheduled in a rather

flexible manner.

Once in Costa Rica, activities started from the work package that focused on research covering

the future perspectives of the national energy system based on interviews with experts. In this

way, the research took advantage of experts’ knowledge, not only in terms of their area of

expertise but also in terms of networking for potential future interviews. Subsequent to these

first contacts, the subsequent weeks were intensively dedicated to interviewing other relevant

actors, visiting projects, and participating in correlated events (e.g. forums and conferences).

Activities, from the work package, also focused on the data collection from other primary and

secondary sources, such as laws and bill proposals at the National Assembly and various

university studies.

Data Collection Methods and Instruments

Data collection, during fieldwork, followed the general analytical explanatory framework

previously defined in terms of outcome, conditions and CM. This included gathering

information on the different renewable energy sources supported in the country, the set of

historical conditions, and the different mechanisms (e.g. efficiency, political power, and

legitimation). The information compilation instruments included interviews, participatory

observation and document analysis. The questionnaire and the list of interviewees by type of

actors, institutions, and the period of comparison are included in Annexes 12.3 and 12.5.

Interviews

Forty-seven interviews were conducted, in total, through semi-structured or in-depth interviews

that followed a general script to cover the topics of interests: actors’ decisions in different

71

periods of time according to different logics/mechanisms. This data collection method is also

open ended, which allowed for other relevant topics to come up (Bernard, 2013). Moreover,

using this method made it easier to adapt to the different types of actors considered.

The actors interviewed include: (1) a representation from the Energy Planning Sector who

formulate policies and guidelines, (2) state investors, mainly the ICE who developed projects in

the past and present from different energy sources, (3) private investors who built projects in the

past and present from different energy sources, (4) civil society organizations, including

environmental organizations, producers/users associations, chambers and international

cooperation, and (5) politicians. Other interviews included experts and the media.

The questionnaire was made up of twenty-five open questions, separated into five sections, to

guide the interviewees’ conversation. The first set of questions focused on aspects regarding the

changing context or setting conditions, in the past, which might have influenced decisions

between technologies. The second section gathered information on the type of technology they

chose and the reason why this and not another was selected. Similarly, the third and fourth

sections of the questionnaire presented choices on energy sources and the logics behind them.

Lastly, the final round of questions dealt with the future perspectives towards carbon neutrality

in 2021.

These interviews shed light on the type of electricity projects and energy sources, supported by

the different actors, in different periods of time. For example, in the interview held with the

Costa Rican Association of Private Energy Producers (ACOPE), a non-profit organization

created in 1990, they have been active, since then, in supporting a mix of technologies, also

geared towards carbon neutrality. The arguments used in their decisions can be linked to

efficiency, legitimation and political power claims.

Participatory Observation

Participatory observation is another data collection method that provides knowledge and allows

the researcher to collect data, narratives or numbers “where the action is” (Bernard, 2013, p.

3010). During the fieldwork, in Costa Rica, three significant events, concerning Costa Rica’s

energy system, took place and allowed to conduct observations form a participant’s standpoint

(see Annex 12.4). The summits’ topics pointed towards the relevance of energy issues in the

national agenda, with the additional advantage that each of them dealt with different topics,

actors and energy sources.

The main objective was to collect viewpoints about the constellations of actors, their interests,

and their claims or decisions’ logic. The first conference was “The National Forum on Clean

72

Energy ‘Jorge Manuel Dengo’ organized by presidential candidate Johnny Araya from the

National Liberation Party (Partido Liberación Nacional, PLN). Throughout the meeting, there

were statements and discussions concerning alternative energy developments. For instance,

politicians stated their support to the Diquís hydroelectric dam, natural gas prospections, and

solar energy as a future alternative.

The second seminar held was “The 1st Seminar on Development and Exploitation of Solar

Photovoltaic Energy in Costa Rica” organized by the Costa Rican Association of Private Energy

Producers (ACOPE), and the third meeting was “The 2nd Annual Forum on Prospects for LNG

and Natural Gas in Central America” organized by the Institute of the Americas (IAS). These

two events evidenced competing interests in the energy arena, supported by different actors,

with varying economic and political resources.

The material gathered from these events included flyers, audio recordings, and presentations.

This observation method added insights to the research that otherwise would have been difficult

to attain, for example, politicians’ and higher officials’ interests from the energy planning sector

(e.g. the Ministry of Environment). These empirical evidences provided information on political

power interests and legitimation aspects.

Policy Documents and Archives

Primary and secondary information, from documentary sources (laws, sector statistics, national

and energy plans, sector regulations, norms and surveys), concerning the electricity sector were

used as additional sources of evidence to complement empirical information. For instance, they

included liberalization laws from the 1990s and bill proposals from 2010 that state the

motivations and general interests of those supporting them. Other secondary sources included

authors’ analyses on social movements linked to electricity and market reforms, in general.

This information was gathered from the National Assembly (legislative commissions and

archives), digital archives from the Energy Direction of the Ministry of Environment and

Energy and the Ministry of Planning, as well as documents from regulatory offices and

university libraries. Additional bibliographical information was collected through conversations

with relevant actors. Data gathered from these sources included sector statistics and national

energy plans that provided information on efficiency claims, while laws and bill proposals

complement information on political power interests and legitimation aspects.

73

4.4.3 Data Analysis

After three months of fieldwork, the data analysis phase began. The first step was the

organization of the empirical material gathered in Costa Rica, which included interviews, policy

documents, reports and articles, together with secondary literature reviewed in different phases

of the research process. These materials were consolidated according to type of actor, type of

technology or energy source, and the relevant theoretical explanation (e.g. logics of efficiency,

power and legitimation). The systematization of information was compiled in a simple data

spread sheet.

Following the methods of institutional analysis and process tracing, the empirical information

was organized by period of time in order to build the case’s story line as a sequence of events.

The main goal was to identify critical junctures and their association with causal mechanisms

that triggered the choices between energy technologies during different time periods. The

qualitative analysis of interviews and documents was supported by the use of Atlas.ti (i.e.

qualitative data analysis software used to extract meaning from text, image, audio, and video).

This software was basically used with the objective of clustering the argument lines by period of

time, actors, technologies and mechanisms, whenever possible.

Assessing Explanations

In theoretical terms, predictions, from competing explanations of the outcome, are assessed by

contrasting them with evidences of the case through the process tracing method. Therefore, the

explanation assessment is based on two criteria: one is its adequacy to explain the case

(according to research questions), and the other is whether or not the elements of the theory

work as predicted. The procedure is based on the triangulation of results from the various

information sources (interviews, documentary information and observation material), as well as

contrasting the theoretical predictions between each other. In this way, the empirical results

were scrutinized and evaluated until sufficient explanations of outcome are crafted.

Moreover, the accuracy of the assessment is improved by increasing the number of observation

periods. This is done by comparing decisions in different periods of time and contrasting them

among different alternative renewable sources. In this regard, the analysis is separated into

three time periods when technological developments occurred:

a) Before 1990: for the origin and consolidation of hydroelectricity in the National

Interconnected System.

b) Between 1990- 2014: besides hydroelectricity, new electricity generation sources were

incorporated in the National Interconnected System. They include geothermal fields,

74

wind energy parks, and biomass electricity stations. The first solar energy installations,

at larger scales, were connected to the National Interconnected System in 2010.

c) Towards 2021: different routes leading towards carbon neutrality.


The methodological approach, developed in this study, to explain the choices made in Costa

Rica regarding alternative renewable sources towards carbon neutrality is based on a within case

analysis design. Therefore, the present study combines the theoretical approach with a narrative

perspective to take an in-depth look into the case. The research intends to shed light, on recent

energy developments, based on past decisions explaining the inertia, rearrangement, and

emergence of energy choices. Furthermore, to some extent, this technological approach is also

considering the relevance of past developments in future expectations.

To reply to the research’s questions, this thesis proposes that, in the case of Costa Rica, there is

room for competing explanations of path dependency. These alternative explanations are framed

as 3 competing hypotheses derived from the empirical level and informed by theory based on

approaches that mainly differ in terms of their mechanisms (i.e. efficiency, political power and

legitimation). The hypotheses are then contrasted with observations over time (data points).

The selected methods of qualitative research were institutional analyses and process tracing

considered suitable to a mechanism-centered approach applied to within-case analysis.

Translating the specific properties of the methods into practice, the institutional analysis is used

for most of the descriptive sections, guiding the comparative analyses between energy sources,

actor constellations, and at different moments in time. The method of explaining outcome

process tracing is an iterative research strategy that is applied to trace the complex conglomerate

of systematic and case-specific causal mechanisms that produced the outcome in question.

Explaining outcome process tracing is a heuristic application of theorized mechanisms, which is

used to elaborate the best possible explanation of a particular outcome. Thereby, results of

process tracing are also relevant to draw inferences that are useful for policy-making. Energy

transformation capacities in Costa Rica have political implications to achieve carbon neutrality,

by 2021, by means of sustainable strategies. This research focuses on institutions, actors and

mechanisms, with aims to contribute for an integrated understanding of the electricity sector.

The summary of stages in the methodological framework, applied in this study, is composed of

the research design and the conceptualization of the analytical explanatory framework, which

started to take form at earlier stages. This methodological framework is illustrated in Figure 3,

based on the cycle of social and political research, revealing the interrelations and sequences

75

between courses of action (Schmitter, 2008). Accordingly, the next empirical section begins

with the historical analyses of decisions in the national electricity system.

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76

Part II Historical Analyses of Decisions in the National

Electricity System

77

5 From Green Republic to Carbon Neutral Nation: Technological and

Institutional Trajectories of Costa Rica’s Energy System

5.1 Introduction

This chapter describes technological and institutional developments, throughout the electricity

history of Costa Rica, that are the basis for further analysis of decisions towards carbon

neutrality in 2021. The chapter takes on a double purpose. First, it aims to characterize Costa

Rica’s general technological path within the institutional, social, economic and political context.

Second, it seeks to identify the conflicting processes and the actors involved, emerging from the

intersection of technological and institutional trajectories.

The path under analysis emerges from technological and institutional entanglements in Costa

Rica’s energy system. At the technological level, the path alludes to the continued reproduction,

though possibly at slower rates, of hydroelectricity investments (i.e. a stabilization stage). This

technological trajectory is not only based on investments but also on institutional, political or

personal interests. These processes render the change to incorporate alternative renewable

technologies difficult.

At the institutional level, the path is notably due to the impact of the ICE and the peculiar

electricity regulatory sector in the country. They provided the material and ideological

foundations for the consolidation of the national energy model. Institutions, in the electricity

sector, evolved along with Costa Rica’s geographic conditions and environmental history, urged

by the creation of natural protected areas in the nation.

The first part of the chapter describes the technological trajectories in the national energy

system. It distinguishes the foundation and consolidation of the hydroelectric path, as well as

the emergence of alternative renewable sources. The second part of the chapter comprises the

evolution of institutional developments and context conditions. This part focuses on the legacies

of the “green republic” and the birth of the “carbon neutral nation”, considering technological,

economic, environmental and social aspects framing the socio-technical challenges of the

electricity sector.

78

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79

5.2 Technological Trajectories in Electricity Production (1880-2010)

5.2.1 Overview: Available Energy Resources

Costa Rica, like most Latin American countries, has an abundance of identifiable energy

resources such as hydro, geothermal, wind, solar, biomass, as well as reserves from oil and gas.

Hence, from an efficiency perspective, the electricity system uses all of them to make the most

of their potential. From the total identified potential of each energy resource, the country utilizes

about 25% installed capacity of hydroelectricity, 22% of geothermal energy, 16% of wind parks,

31% of biomass and 1% of solar energy, as illustrated in table 4. The use of other renewable

sources is minimal, while national fossil fuel reserves are not currently exploited.

Table 4. Energy potential from different local sources

Source: ICE (2014)

On the whole, the Central American region is favored with abundant water resources, most of

them untapped, with the exception of Costa Rica that harnesses 20.7% of its water supply

(GWP, 2011). Amid the country’s economic activities linked to water use, electricity uses 94%

of total water extractions. Irrigation activities for agriculture represent 3%, while another 3% is

distributed among drinking water, tourism, other industries and commercial consumption, as

illustrated in table 5.

Shares (%) Biomass Wind energy Hydroelectricity Solar energy Geothermal

Identified

potential (MW)

122 894 7034 126 875

Installed

capacity (MW)

38 144 1768 2 196

% Installed

capacity

31% 16% 25% 1% 22%

80

Table 5. Water use in Central America

Source: GWP (2011)

The country has 34 major hydrographic water basins, half of them with hydroelectric

installations (DSE, 2008a). The considerable volume of annual rainfall (3.300 mm) and the

distribution of water flow in several watersheds located in different regions (PEN, 2005)49

produce favorable conditions for the utilization of the resource. Water flow is different between

watersheds; those located in the Pacific have lower volumes, especially notable during the dry

season (from December to April), than those in the Caribbean, where the dry season is not

clearly defined.

Underground energy is another important source, used in the country, for electricity generation.

Costa Rica is among the top ten geothermal producers in the world (IEA, 2010). There are 28

areas identified with geothermal potential, whose main sites are located in the Guanacaste

province (Northern region) and the Central Valley, specifically in the volcanic areas of the

Guanacaste and the Central Volcanic Mountain Ranges (Yock Fung, 2008). The country’s

volcanoes are part of the ‘Pacific Ring of Fire’, which encircles the Pacific Ocean, sitting on the

edge of the Pacific Tectonic Plate. Along this plate are located most of the active or dormant

volcanoes on Earth (about 75%). In Costa Rica alone, there are over 120 volcanic sites of which

six are considered active volcanoes, 61-are dormant and the balance is believed to be extinct.50

Situated in the same Volcanic Mountain Ranges, the areas with major wind potential in the

country are Guanacaste, Arenal Lake and the Central Valley. The Northern region is among the

49 In regions with higher precipitation, such as the Caribbean and Northern regions, the annual volume

surpasses 7000 mm. As a reference for comparison, in Germany, annual precipitation reaches 700 mm. 50 The Pacific Ring of Fire. (1996-2015). Retrieved June 23, 2015, from

http://education.nationalgeographic.com/encyclopedia/ring-fire/

Water supply

(mm3/year)

Water demand

(mm3/year)

Resource

utilization (%)

Main users (%)

Panama 193500 12500 7.0 Hydro (72); Transportation (20);

Irrigation (3.5)

Costa Rica 113100 23500 20.7 Hydro (98); Irrigation (3); Drinking

water and others (3)

Nicaragua 189700 1956 1.0 Hydro (25); Irrigation; Drinking water

Honduras 92850 8450 9.1 Irrigation (61); Drinking water (23);

Hydro (16)

El Salvador 18252 1844 10.1 Irrigation; Drinking water; Hydro

Guatemala 97120 9596 10.0 Irrigation (41); Drinking water (9);

Hydro (4); Others (4)

Belice 18550 568 3.0 Agriculture (44); Industry (36); Domestic

(20)

81

best area for electricity production and where wind velocities are most suitable to develop on-

grid projects (DSE, 2008a). Costa Rica is a leader in Latin America’s wind energy use, even

though most of its wind potential still remains untapped (LAWEA, 2010). Pioneering wind

projects in the Central American Region were developed in Costa Rica, by private investors,

during the early 1990s based on information from previous technical studies launched by the

ICE in the 1970s. The theoretical wind potential was initially estimated in 14000 MW, but more

recent valuations reduced the economic potential to half. In the ICE’s last report, the identified

wind energy potential was established in 894 MW.

Back to earth, biomass resources such as firewood, agricultural residues, biogas and ethanol

have much potential in the country; though, little research has been conducted in this area (DSE,

2008a). Besides the traditional firewood, extensively used for lighting and cooking, biomass

from bagasse is considered an established technology able to produce electricity at a low cost.

Biomass resources, for electricity production, were integrated in the national grid connection

with the incorporation of co-generation from existing sugar cane producers. Other biomass

resources, like biogas and biofuels, are regarded as emergent. The first biogas plant in the

country running with waste-to-energy technology began operations in 2004 (i.e. Río Azul, 3.7

MW).

Biomass is already an important source of power generation in Brazil, Colombia, and Central

America. Its growth is influenced by the sugar mills’ ability to expand production and by

fluctuations in sugar prices. The use of sugar cane residues, for electricity generation, could

further be encouraged in light of a ban against burning field trash and related regulations.

Meanwhile, the theoretical potential of solar energy, in the country, is enormous (i.e. estimated

in 10,000 MW); however, the current economic potential is identified at only 126 MW (DSE,

2008a; ICE, 2014). Costa Rica’s average irradiation levels are between 1650 and 2200

W/m²/year. The lowest irradiation levels, in the nation, are comparable to the higher irradiation

sites in Germany (i.e. 1300 W/m²/year). The areas with higher irradiation are located in the

Northern Pacific and the Central Valley.

Although the cost of the solar technology (e.g. photovoltaic and thermal) is considered high,

recent studies indicated that, in terms of average cost, the technology is already competitive

with conventional infrastructures. The average cost of solar energy ranges between 7.8 and 9.1

US dollars cents per kWh for small- and medium-scale applications. Meanwhile, the planned

cost of hydroelectric production ranges from 7.6 to 16.2 US cents per kWh, a similar price range

to new geothermal projects. In turn, the costs of fossil fired thermal plants escalate to more than

50 US cents per kWh. These higher costs are the outcome of high oil and diesel prices, a low

utilization ratio and the decreased efficiency of generators (Weigl, 2014).

82

Costa Rica has proven existence of oil reserves; however, the country is dependent on fossil fuel

imports, especially for transportation.51

Prospection, exploration and exploitation activities of

fossil fuels and natural gas resources were initiated in 1874 in Talamanca, in the province of

Limón (Southern Region), and developed in different stages (DSE, 2008a). During the 1950s

and 1960s, several exploratory oil fields were opened in this region, one of them yielding 1000

barrels per day, but its production was stopped due to technical problems. Oil exploration and

exploitation continued, in the following years, through the Costa Rican Petroleum Refinery

(Refinadora Costarricense de Petroleo, RECOPE) in agreement with several international

organizations.

Since 1993, private companies were also allowed to develop those activities. In 1999, a

concession, to explore 4 blocks (2 offshore and 2 onshore), was granted to Harken oil drilling

holding. However, this concession was halted during President Abel Pacheco’s Administration

(2002-2006, PUSC) due to pending environmental impact assessment studies. Currently oil

drilling is banned in the country until 2021.

Conclusively, although nuclear energy is considered a low carbon energy source, it is

commonly excluded from renewable energy definitions (World Nuclear Association, 2014).

Costa Rica has no nuclear reactors and no research reactors. With the Fukushima crisis still

fresh, pulling away from nuclear energy is considered a must, not only in Japan but also in a

number of European countries, excluding France (Deloitte, 2013). In Latin America, nuclear

energy expansion is not being excluded; however, plans have been put on hold in some

countries.52

Table 7 and Map 1 included at the end of this chapter provide an overview of the

type of projects carried out in different periods of time and their geographical location.

5.2.2 Foundation and Consolidation of the Hydroelectric Path

The origin and expansion of electrification, in Costa Rica, is largely based on the foundation

and consolidation of the hydroelectricity path. In this country, electrification began shortly after

the first lighting systems were installed in ‘modern cities’ of the world in the ninetieth century

(Rohrmoser, 1986).53

During this period, private entrepreneurs mounted the first hydroelectric

plants (HPs), in Costa Rica, in order to provide electricity to the city of San Jose’s center. These

51 Oil refining, transport and distribution can be carried out in the country. 52 “Bolivia Wants Nuclear Energy, But Brazil and Other Latin American Countries are Abandoning It”,

International Business Times. 01.03.2014. 53 San José became the first city in Latin America with street lights, three years after New York.

83

HPs were mainly small run-of-the-river (ROR) hydroelectric stations, such as the 50kW

Aranjuez HP built in 1884 by the first Costa Rican electric company. 54

The construction of HPs continued, as a result of municipal and private undertakings, from

national and foreign electric companies motivated by industrial and commercial demands. From

1928 to 1948, the services continued under the monopoly of the Electric Bond and Share

Corporation. Since 1949, the state took control and the Costa Rican Institute for Electricity

(ICE), a vertically integrated decentralized public company, became the entity in charge of

supplying electricity services.

Since then, the National Electric System (NES) and the National Interconnected Systems (NIS)

were developed together with hydroelectricity installations.55

Between 1950 and 1987, most of

the seven largest HPs of the country (i.e. over 100 MW) were built by the ICE, including the

Arenal dam (i.e. 157MW installed capacity) that began operations in 1979 (ICE, 2014).

The

company took advantage of the local resource availability and economies of scale developing

electricity infrastructure based on hydroelectricity (Wilde-Ramsing & Potter, 2008).

Hydroelectric projects were combined with fossil fuel-based thermal plants, which were

considered an important complement due to the dynamics of peak load demands (Wilde-

Ramsing & Potter 2008). In this period, fossil-fueled stations generating electricity by means of

steam, such as the Colima thermal plant (i.e. 19 MW), built in 1956, were also operating as

back-ups to HPs, during the dry season, when their production is considerably reduced. In Costa

Rica, oil derivatives and gas were usually the energy sources of fossil-fueled thermal plants, but

since the mid-2000s it changed to bunker, which is a cheaper fossil fuel but also a more

pollutant one (ICE, 2013; DSE, 2009, p.106).

In the 1970s, the national energy system was made up of 70% hydroelectricity and 30% oil

products (Mayorga, 2013: 9-8). Research on other forms of renewable energy in the country,

including geothermal energy, wind resources, solar energy, biomass and small hydro was

initiated by the ICE in this period, triggered by the oil crisis and a “further increase in the

ecological awareness of the public opinion” (Díaz, 2006). All reports and research conducted,

during this period, gave birth to the ICE’s Program of Non-Conventional Energy Sources.

Nevertheless, concrete projects, using these technologies, were delayed for two decades.

54 Historia del ICE. (2013, January 14). Retrieved February 22, 2014, from

http://www.grupoice.com/wps/portal/gice/acercaDe/acerca_ice_asi_somos/acerca_ice_asi_somos_histori

a. 55 The National Interconnected Systems (NIS), different to the National Electric Systems (NES), excludes

off-grid installations. Both include the ICE own plants, private generation and public-private partnerships.

84

Meanwhile, similar to other Latin American countries, the government had access to loans that

allowed investing in mega hydroelectric projects (Tissot, 2012). The main source for financing

electricity projects was the Inter-American Development Bank (IDB), a similar role portrayed

by the World Bank (WB) in the telecommunication sector (Bull, 2005). For instance, the

construction of the Arenal dam and its reservoir was financed by an IDB loan (i.e. US$525

million) (OIRSA, n.d.). The ICE’s own resources were limited because of the political vision

regarding the need to subsidize rates for several society groups (Vargas, 2002).

Lake Arenal is the second largest artificial water reservoir in Central America (after El Cajón

dam in Honduras, 300MW) and is one of the main HPs of the NES. The most important role of

the Arenal dam, within the NES, is the inter-annual regulation capacity of the reservoir; in

addition to an important irrigation system located downstream (i.e. the Arenal-Tempisque multi-

use irrigation project). The dam is part of the hydroelectric Arenal-Corobicí-Sandillal complex,

which consists of three power plants built in cascade (DSE, 2011a).

The Arenal-Tempisque multi-use irrigation project was developed between 1975 and 1978,

which operates under administration of the National Irrigation and Drainage Service (Servicio

Nacional de Aguas Subterráneas, Riego y Avenamiento, SENARA) (DSE, 2011a). This is the

country’s largest irrigation project, not only in terms of serviced territory, but also in number of

beneficiaries (IICA, 1991). This irrigation project highlights the relevance of the Arenal

watershed, not only for electricity, but also for irrigation purposes.

Besides the Arenal dam, other medium- and small-sized RORs were also equipped with

regulation reservoirs (i.e. smaller dams) in order to reduce their sensibility to rainfall variability.

These smaller dams have the capacity to store water during the rainy season and to generate

electricity during the dry season (DSE, 2008b). Some of these plants even surpass the Arenal’s

installed capacity to produce electricity (e.g. Angostura HP), but none of them have a similar

water reservoir with inter-annual storage capacity.

By the end of the 1980s, just after the Arenal dam went into operation, hydroelectricity provided

99% of the national supply and, consequently, the use of fossil-fueled thermal plants was kept to

a minimum (DSE, 2008b). Even in periods when oil prices decreased, during the 1980s, and

most neighboring countries shifted to fossil fuels, Costa Rica remained true to its

hydroelectricity-based model (Bull, 2004). In this period, no additional fossil-fueled plants were

incorporated in the NES, although four new ones came into being during the next decades

reaching larger generation capacities, as illustrated in Table 7 at the end of this chapter.

85

5.2.3 Emergence of Alternative Renewable Energy Sources

During the 1990s, the ICE continued the construction of HPs with ongoing liberalization

reforms of the sector. After the Arenal complex’s last dam, another hydroelectric complex,

known as Toro, began operations also in the Northern region (e.g. Toro I HP, 23 MW and Toro

II 65 MW). The last HP, Toro III (50 MW) started functioning, in 2013, after 5 years of

problems with constructions and delays due to litigation and expropriation processes.56

In the 2000s’ decade, the largest hydroelectric plant was Angostura HP (180 MW, including a

dam). According to expansion plans, the next largest would have been the Boruca dam (1500

MW), in the Southern region, foreseen to be inaugurated in 2010.57

However, this giant project

was involved in a long conflict resolution process, mainly because it would flood parts of

indigenous territories (Carls & Haffar, 2010).

Meanwhile, legislation amendments, introduced by Laws 7200 (1990) and 7508 (1995), allowed

limited participation of private generation plants (i.e. Independent Power Producer, IPP) in

delivering electricity to the grid. Their incorporation had given a new impulse to private

hydroelectric projects, though according to regulations their size was restricted to below 20

MW. The projects then scaled up to 50MW, with the use Build-Own-Operate-Transfer, known

as BOT, specified in Law 7508. From 1990 to 2000, nearly 27 RORs of small to medium

capacities, were built (Cartagena, 2010).

Parallel to the proliferation of RORs, the 1990s also witnessed the emergence of alternative

renewable energy carriers. Diversification of the NES, with alternative renewable sources,

became evident, in the mid-1990s, when the first geothermal units, wind parks and biomass

stations went on line. As pointed out earlier, most modern technologies, using renewable energy

sources, were invented (and patented in industrialized countries) before the 1970s. However,

from a technological standpoint, they were not radical innovations (Mautz, 2007).

56 “Litigio por expropiaciones frena y encarece hidroeléctrica Toro III” La Nación, 14.02.2010. 57 “La Angostura prende máquinas” La Nacion, 21,07.2000.

86

Graph 1. Costa Rica: Electricity production from different sources (% of total)

Source: World Bank, World Development Indicators.

As illustrated in Graph 1, compared to previous decades, alternative renewable sources came

into the scene after 1990, displacing part of the oil electricity production. The development of

geothermal fields was already planned, since the mid-1970s, but given the complexity and cost

of geothermal developments, the first geothermal station was not connected to the grid until

1994 (Battocletti, 1999; Interview 4C, 2013). From 1995 to1998, installed geothermal capacity

grew from 60 MW to 110 MW, all developed by the ICE, even though different external

partners supported the ICE since the beginning. External partners included international

organizations, such as the United Nations doing first assessments, whereas multilateral banks

and international cooperation (e.g. Japan, Mexico, the IDB) financed technical studies prepared

by consultancy firms, research organizations, and specialized manufacturers (Moya & Yock,

2007).58

Private investments were directly included in the construction and operation of the Miravalles

III geothermal plant (26MW) that came on line in 2000 using the BOT figure (ICE, 2014). Two

more geothermal units, operated by the ICE, were added in the following years (i.e. Miravalles

V, 11 MW and Las Pailas I, 35MW). In 2010, total geothermal installed capacity reached 165

MW (i.e. 6% of the total installed capacity) and generated over 12% of the national electricity

(DSE, 2011a). By the year 2012, this capacity grew to 217.5 MW, producing over 14% of the

national electricity (ICE, 2014).

In Costa Rica, geothermal electricity production for commercial purposes uses high enthalpy

geothermal resources (i.e. a common criterion that provides a rough estimate of the resource

58 Recognized technology manufacturers and consultancy firms included Rogers Engineering Co.,

GeothermEx and Foraky-Foramines during the 1970s; ELC-Electroconsult during the 1980s; and more

recently, in cooperation with the International Atomic Energy Agency (IAEA), the Department of

Scientific and Industrial Research (DSIR) and the Los Alamos Technical Laboratory (Moya & Yock,

2007).

%

0

10

20

30

40

50

60

70

80

90

100

1970 1980 1990 2000 2010

Electricity production from hydroelectric

sources (% of total)Electricity production from oil, gas and coal

sources (% of total)Electricity production from renewable sources,

excluding hydroelectric (% of total)

87

value).59

Those resources of high enthalpy are located in nearby volcanic areas, most of them

inside or adjacent natural parks or protected areas where economic activities are restricted by

law. At the moment, the low enthalpy is exploited for ecotourism purposes (Arias, Barahona &

Valverde, 2014).

Currently, Las Pailas is the only geothermal area under development. A large portion of Las

Pailas geothermal resource is located within the Rincón de la Vieja National Park boundaries

and the Guanacaste Dry Forest property, which is the reason why the study area is restricted to

11km2 (Yock Fung, 2008). Still, other pre-feasibility and feasibility studies underway are

considering areas located inside or near natural parks (Moya & Yock, 2007).

In the case of wind energy, early resource assessment difficulties were later translated into

advantages for private investors. During the 1980s, the ICE faced problems in gathering precise

data, as criteria, to select the area for future wind parks. Thus, the Institute decidedly hired the

Swiss company, Electrowatt Ingenieros Consultores S.A., as a consultant backed with a credit

from the International Bank for Reconstruction and Development (IBRD). The consultation

report noted that “it was probable that the electricity generated from wind sources would never

reach relevance in comparison to hydroelectric energy”, even though it should be considered an

alternative in areas where its production could be guaranteed (Díaz, 2006, p. 11).

Similar experiences and evaluations of the wind resource continued parallel to technical studies

of geothermal fields. The government finally opted to continue pursuing geothermal projects. In

1994, a US$4 million credit from the Inter-American Development Bank (IDB), signed in 1977,

led to the development of the Miravalles geothermal field (Boca de Pozo, 5MW and Miravalles

I, 55 MW) (Díaz, 2006; Battocletti, 1999). According to technical reports comparing

geothermal and wind energy potential, the geothermal energy potential for electricity generation

was greater than that of wind:

“reaching an approximate potential of 1000 MW in reserves and 2250 MW in resources

(…) of geothermal production in areas type A, compared with a (wind energy) annual

potential of 600 MW (…) in zone 1 including Tilarán” (Díaz, 2006, p.24).

Consequently, and differing from the geothermal case, in the development of wind technology,

private capital provided the resources necessary to initiate operations. Nonetheless, in previous

decades, wind potential assessments, in the country, had been carried out by the ICE. In 1996,

59 The enthalpy of the geothermal fluids act as the carrier transporting heat from the deep hot rocks to the

surface, it is more or less proportional to temperature and is used to express the heat (thermal energy)

content of the fluids (What is geothermal energy?. (2004, February). Retrieved June 10, 2014, from:

http://www.geothermal-energy.org/what_is_geothermal_energy.html, last visited 10.06.2014)

88

the private company, Pesa S.R.L, developed the first wind park in Costa Rica (i.e. Plantas

Eólicas, 20 MW) (LAWEA, 2011). The project was followed by another two private wind

facilities that also went on line in the 1990s (i.e. Aeroenergía S.A., 6 MW and Tierras Morenas,

20 MW) (ICE, 2011a).

In the 2000s, another private wind plant was added to the grid (i.e. Guanacaste, 50 MW)

together with the first wind park from the ICE (i.e. Tejona, 20 MW). After 2010, two more were

inaugurated in the Central Valley, one from a cooperative (i.e. COOPESANTOS) and another

from the Power and Light National Company (Compañía Nacional de Fuerza y Luz, CNFL), a

subsidiary of the ICE that operates in the region (DSE, 2011a; ICE, 2014).

By 2010, wind energy was generating 4% of the national electricity, while the installed capacity

reached 121 MW (i.e. 4% of the total NES). This infrastructure increased to 148 MW in 2012

(i.e. 5% of the total NES). At present, out of the options available, wind technology offers

benefits to private investments since it is considered a mature technology and the cost continues

declining (LAWEA, 2010). Additionally, it offers a key advantage as a complement to

hydroelectricity generation since the generation of each one is independent from the other

(Tissot, 2012).

Meanwhile, biomass was integrated in the NES, with the co-generation incorporation from

existing sugarcane producers, after liberalization reforms in the 1990s. During that time, the

sugar mills El Viejo (18 MW) and Taboga (19 MW) started to sell their energy surplus

generated by bagasse from their own equipment, a fibrous matter resulting from sugarcane

processing (ICE, 2014). Similar to wind energy, biomass from bagasse also complements

hydroelectricity because “the seasonality of the sugar cane crop supplements the seasonal

variations of hydroelectric plants very well” (ICE, 2014, p. 39). In 2004, the first biogas plant,

in Costa Rica, running with waste-to-energy technology (i.e. Río Azul, 3.7 MW) began

operations as a private initiative undertaken by the Group Zaret.

In the case of biofuels, the ICE deems their potential important, since they can be used as a fuel

source for existing thermal plants running with fossil fuels by making minimal adjustments

(ICE, 2014). Nevertheless, this option is limited due to the lack of infrastructure for national

production, on a large scale, and the inexistent distribution or storage chains. Moreover,

production costs of biofuels are still higher than market prices from fossil fuels (ICE, 2014). By

2010, the installed capacity of biomass units reached 44 MW (i.e. 2% of the total NES) and

generated over 0.7% of the national electricity (DSE, 2011a).

The solar cell and photovoltaic technology (PV) was invented, in the 1950s, in industrialized

countries and was only used for spacecraft and certain small-scale niche applications (e.g. toy

89

cars, watches) until the 1970s (Mautz, 2007). In Costa Rica, the first experimental applications

of solar energy systems date back to the 1970s, in projects conducted by Universities, and

focusing on solar thermal applications such as solar cookers and solar dryers for varying

purposes (Nandwani, 2009).60

Simultaneously, the ICE conducted research on the PV and

started to use this technology in niche applications for telecommunication and grid operation in

the 1980s (ICE, 2007).

Among available options, solar energy was excluded from the step in size of alternative

renewable sources in the mid-1990s, as illustrated in Graph 1. While commercial applications of

solar energy at end-user level were disseminated in industrialized countries since 1980s, in

Costa Rica, the ICE installed, in 1991, the first photovoltaic (PV) solar home systems (SHS)

targeting indigenous settlements without access to electricity (ICE, 2007; Mautz, 2007). Later

on, more SHS were distributed on islands, protected areas, and other communities with low

population density and difficult access to public services (ICE, 2007; MINAE, 2005).

Following developmental approaches and technical considerations, these projects were

integrated in the Rural Electrification Program with Renewable Sources (Programa de

Electrificación Nacional con Energía Renovable en Áreas no cubiertas por la Red, from now on

referred to as REP) launched by the ICE in 1998 (MINAE, 2005). The REP included the

participation of Coopeguanacaste R.L., a rural electricity company located in the Northern

Pacific Region where solar systems were also distributed.61

These projects were financed partly

by the ICE or by Coopeguanacaste´s own funding, besides credits and donations obtained from

developmental financial organizations (e.g. IDB; UNDP; GEF).

Accordingly, these alternative renewable technologies provided beneficiaries with electricity

access in rural and remote areas, where energy is often crucial to human development, at

subsidized rates (MINAE, 2005). The SHS capacities remained at micro and small scales

ranging from 70 to 100 Watts in order to fulfill some elementary energy demands such as

lighting and running basic electrical appliances (Interview 1Q, 2013; ICE, 2007).62

In addition,

the proposal for donors, prepared in 2005, stated that the REP followed two country goals: one

to achieve 100% electricity coverage and the other to use renewable energy (i.e. small hydro or

PV) avoiding CO2 emissions (MINAE, 2005).

60 Applications of solar thermal include distillation, sterilization, pumps for clean water supply, water

heating, milling of grains or drinking canals, besides measuring equipment and electric generation

systems (Nandwani 2009). 61 The Northern Pacific Region is important for the national economy in terms of agriculture, cattle and

tourism, but it is also one with the highest poverty levels. The region posses the best radiation conditions

of the country (Weigl, 2014). 62 The PV applications include lighting and running basic electrical appliances (TV, radio, mobile phone

charger, refrigerators, and computers).

90

From 1998 to 2009, the program installed 1500 photovoltaic systems in different regions of

Costa Rica (ICE, 2009). However, given the solar systems’ small size, their energy provision

was not evidenced within the sector’s electricity statistics. By the year 2010, they jointly only

reached 323 kW of installed capacity, remaining with low visibility and attracting reduced

political attention.

Besides rural electrification projects, with the use of micro and small SHS, in the early 2000s,

commercial solar energy applications, at end user level, were also sold in a domestic niche

market by the private initiative of small businesses. Commercial solar systems focused on two

types of technologies, solar water heating and PV panels, mostly purchased by wealthier

residents and few customers from the national industry (e.g. eco-tourism). The domestic market

is made up of local distributors or installers, with the balance of system components (Interview

5N, 2013.63

Supporting this process are studies promoted by research institutes at the ICE, universities and

associations; as well as donors, banks, and other financial organizations providing funds at

company and user level in the first steps of the business. For example, the solar energy market

became more dynamic, in 2010, with the stimulus of the Net Metering Pilot Program, also

known as Distributed Electricity Generation Plan (i.e. Plan Piloto de Generación Distribuida

para Autoconsumo, from now on referred to as DEG), and the first 1 MW solar park launched

by the ICE in 2011. With these projects, solar energy installations grew in more than 100% in a

few years and the installed SHS goals reached almost half of the target proposed in the

expansion plan for the next 10 years.

Table 6. Photovoltaic systems installed by the ICE

Source: Own elaboration based on Arias (2013).

63 The solar-component manufacturers are firms from industrialized countries like Siemens Solar, Sharp,

Kyocera, General Electric, and solar divisions of oil-companies such as BP Solar and Shell Solar

(Interviews 5N, 2013).

Solar projects

(medium size installations)

Year of installation Total installed capacity (MW)

Miravalles Solar Park 2011 1

Net Metering Pilot Program 2010-2013 0.17

Rural Electrification Program (ICE

and Coopeguanacaste)

1998-2012 0.32

On-grid Solar Plants for Self

Consumption ICE

2005-2012 0.04

TOTAL 1.53

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Until 2011, electricity generating installations, from solar energy, remained outside the NES

accounts. It was just after the first solar energy park that this type of energy was evidenced on

the sector statistics. Solar energy is an example of a technology largely unused compared with

the theoretical estimated potential. Table 6 summarizes the advance of photovoltaic systems

installed by the ICE.

According to the National Household Census (2011), 1772 households are using solar panels in

Costa Rica, most of them are located in Puntarenas (in the Central Pacific province), and the

majority are part of the rural electrification program (i.e. 1650 according to the ICE’s data).

From the year 2000 and 2011, households without electricity fell from 3.2 % (30.244

households or 126.753 people) to 1.1 % (13.533 households or 47.209 people). Yet, at the end

of the 2000s, the use of firewood sources for residential energy consumption reached 50%,

while in this decade the use of electricity decreased (DSE, 2009).

The limited penetration of small-scale systems in the Costa Rican market has been connected to

high front costs and low electricity tariffs that discourage private investments (LAWEA, 2010;

FINE interviews 2010). This also applies to wind energy, at small scales, since the necessary

equipment has relatively elevated costs when factoring in transportation, import and national

taxes. Meanwhile, the construction of fossil-fueled thermal plants increased during this period.

Besides the Moin II (i.e. 131 MW) in 1992, four more fossil-fueled facilities were added in the

next decade, expanding by twofold the existing capacities. Furthermore, delays in the

construction of Pirris HP, motivated hiring more fossil-fueled plants from private companies,

two of them were later bought by the ICE in 2008 (i.e. Guápiles and Orotina plants).64

By the

year 2010, fossil-fueled installations, without considering the plants temporarily hired, reached

616 MW and 23% of total installed capacity. When included, they reached 862 MW (i.e. 31% of

the total installed capacity). In terms of electricity generation, fossil-fueled plants provided

6.7% of the national electricity consumed during 2010 (DSE, 2011a).

Despite the advantages provided by fossil-fueled thermal plants, as peak hour plants and as a

back-up to hydroelectricity, they are associated with several negative impacts. Above and

beyond increasing the cost of electricity and the cost of exceeding capacity (i.e.by not using full

capacity), fossil-fueled thermal plants also complicate electricity price regulation, given

international fluctuations in oil and gas prices. It also negatively affects the trade balance. Not to

64 “ICE garantiza servicio de plantas térmicas rentadas” La Nacion, 11.12.2007. “Atraso en obras obliga

al ICE a comprar plantas a Grupo Pujol” LA Nación 29.01.2010.

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mention pollution and CO2 emissions to the atmosphere, especially from bunker fueled plants

used in the country.

In summary, by the end of the 2000s, hydroelectricity upholds its preeminence. Total electricity

generation for the NES was made up of 70% hydroelectricity, 15% from other alternative

renewable sources and another 15% was from oil products. The country was situated in the

forefront of renewable electricity production from a diversity of sources, of which more than

12% corresponded to electricity generated from geothermal stations, 4% from wind parks and

1% biomass stations. However, the year 2010 showed a stark increase in the share of fossil-

fueled installations, coupled with a fall in hydroelectricity shares.

In terms of installed capacity, comparing figures from 2000 and 2010 hydroelectric total

installed capacity in use fell from 72% to 57%, while the share of oil-fueled stations spiked

from 17% to 31% (including temporally hired plants). According to the Energy Planning

Sector, fossil-fueled thermal plants began to rise in the last decade, reaching unprecedented

levels since 2006, while alternative renewable sources’ penetration remained limited (DSE,

2011b). Although, this could be considered a transitory situation, a trend can be traced over the

last decades.

In terms of electricity production, except for geothermal stations, the generation from alternative

renewable sources was stranded below 5-7%. Meanwhile, hydroelectric shares have been falling

gradually over the decades, in spite of the incorporation of larger hydroelectricity projects.

Compared to the 1980s, the hydroelectricity share from total electricity production fell from

99% to 80% in the 1990s and remaining over 70% in the late 2000s, comparable to the 1970s

level. The Latin American region reflects a similar trend and estimates suggest that

hydroelectricity will continue to be the most important source of electricity generation, though

with declining contributions to the electricity mix (Tissot, 2012).

The present description of the technological electricity trajectory in Costa Rica raises several

concerns from an institutional perspective. Firstly, what are the institutional factors that explain

the predominance of hydroelectricity in the first place, even in periods when oil prices went

down? Secondly, what are the origins of its declining contribution? Thirdly, why does the

penetration of alternative renewable sources remain limited? And finally, if there is a growing

relevance of alternative renewable sources in the last years, particularly solar energy, why is this

taking place?

The next section is not aimed at answering all these questions; however, it shall outline the

institutional conditions, along with the social, economic and political context, which evolve

jointly with technological trajectories. In this sense, the following segment draws attention to

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the center of conflicting processes that emerge when technological paths and institutional

trajectories are intertwined.

5.3 Institutional Trajectories in Electricity Production (1880-2010)

5.3.1 The “Green Republic” of Costa Rica

The construction of the Costa Rican “green republic” is based on the relationship between the

country’s economic growth model and environmental conservation policies. These

entanglements also shaped developments in the electricity sector, from material and ideological

bases. The legacies of this Republic help to understand the consolidation of the national

hydroelectricity-based energy model, with limited dissemination of alternative renewable

sources, as well as the institutions that flourished by the hand of state actors, in particular the

ICE, and the consensual or antagonistic relations between state and society.

According to Sterling (1999), the historical background of Costa Rica’s image as a “green

republic” can be traced back to the sixteenth century, when early decrees and proclamations for

forest preservation and soil conservation were declared. However, the author states that the

scientific interest regarding Costa Rica’s tropical ecology actually began in the nineteenth

century with the international demand for coffee and the construction of the Panama Canal. It

was not until then that works on the nation’s Natural History became known.

Furthermore, the events of the nineteenth century were a milestone for the national institutional

trajectory in many areas of the country’s development, including electricity services. Historical

analyses points to the Welfare State as a critical juncture explaining “the Costa Rica’s

uniqueness factor” in terms of social and economic indicators that distinguished the country

from other nations in Latin America (Sterling, 1999, p. 1).65

The foundation of the Welfare

State, in Costa Rica, is usually linked to political events that occurred during the 1940s, yet its

first origins can be traced back to the establishment of the Liberal period, in Central America,

during the nineteenth century (Bull, 2005).

Prior to 1929, the agricultural export model, established in the Central American region, was

based on single crop farming, such as coffee or bananas, which in Costa Rica accounted for

65 These indicators were not only in terms of poverty, income per capita and literacy rates, but also

consider social services, such as socialized healthcare and electricity coverage; also with one of the

lowest electricity tariffs and reduced efficiency losses in electricity transmission (Sterling, 1999: Bull,

2005).

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nearly 90% of export earnings (Schneider, 2013).66

With the introduction of the Liberal statute,

the public sector and the state could now collect increased revenues. State institutions were

created and the national infrastructure was improved, though rural areas continued to be isolated

(Bull, 2005). The origins of public electrification dates back to this period when the first public

lighting system was set up in 1884.

In the late 1920s, in Costa Rica, the market for electricity services was dominated by the

Electric Bond and Share Corporation from the United States (U.S.) and a few more private

companies (Vargas, 2002). Emerging resistance against U.S. companies, influenced by ideas

from abroad which opposed excessive international influence, complicated the situation for the

foreign corporation, as well as for banana companies located on the Caribbean coast (Bull,

2005). Moreover, financial problems and the lack of perspectives to expand electricity services

gave way to disconformities on behalf of the general public (Vargas, 2002).

As a result, the movement seeking to increase state control over the country’s hydroelectric

forces grained strength. In 1928, Law 77 established the National Electricity Service (Servicio

Nacional de Electricidad, SNE) as an autonomous institution with the authority to exploit

energy sources, granting concessions, and supervising their utilization.67

Nevertheless,

electricity problems continued in the downturn of the Great Depression, coinciding with a

period of economic disruption, and political and social unrest (Schneider, 2013).

Bull (2005) notes that by the 1940s, the Costa Rican agro-export elite was weaker than in

neighboring countries which reduced the need for a military apparatus to control the land and

labor. This simultaneously allowed for greater state power centralization and the emergence of a

liberal oligarchy with a project to promote welfare and development. Nevertheless, prolonged

social reforms, under Calderón Guardia’s presidency (1940-1944), including the creation of

other autonomous institutions (i.e. the Costa Rican Social Security Institution), resulted in

struggles with the oligarchy that escalated into civil war in the aftermaths of the 1948 elections.

The war ended a month later with the victory of a revolutionary “Junta” headed by Figueres

Ferrer (1948-1949, later president in 1953-1958 and in 1970-1974), who declared the funding of

the ‘Second Republic’.68

During this period the Costa Rican Electricity Institute (ICE) was

66 Unlike many Latin American countries, coffee trade was controlled by local Costa Ricans, while in the

banana business large capital intensive labor and transportation infrastructure opened the door to foreign

multinational corporations, such as the United Fruit Company (Sterling, 1999). 67 Historia del ICE. (2013). Retrieved January 14, 2013, from

http://www.grupoice.com/wps/portal/gice/acercaDe/acerca_ice_asi_somos/acerca_ice_asi_somos_histori

a 68 In reference to a breakdown with the old generation of politics and politicians that belonged to a “First

Republic”. The “Junta” represented a new elite who sent the old oligarchic leaders to exile and banned

the Communist Party. The military was abolished under this reform platform.

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established, in 1949, by Law 449. The ICE assumed the monopoly of electricity generation and

supply and was given the responsibility to ensure the availability of electricity for the national

economy and the welfare of Costa Ricans.

In order to enhance autonomy from politicians, the ICE was also conceived as an autonomous

institution, with full independence from the executive power, and to be guided exclusively by its

own Board of Directors. The Board was conformed of private sector representatives,

engineering schools, and other civil society organizations (Vargas, 2002; Bull, 2005). The

electricity provision structure relied on the ICE, as a decentralized and vertically integrated

public company, that merged the private local monopolies into a national state company with

vertical integration in the chain of production (Vargas, 2002).69

From its onset, rural cooperatives and municipalities had been incorporated and perceived as

complementary distribution companies in order to integrate those remote areas from the Central

Valley (Vargas, 2002). The Latin American region experienced similar transformations after

World War II (WWII), with the subsequent rapid expansion of the electricity sector with

vertically integrated State-owned utilities (Tissot, 2012). Although the events of the 1940s, in

Costa Rica, can be seen as a continuation and not a rupture of state intervention, they gave way

to state expansion in order to achieve the economic modernizing project (Bull, 2005).

Moreover, they were of significant political relevance for the country as the two traditional

political parties, National Liberation Party (Partido Liberación Nacional, PLN) and the Social

Christian Unity Party (Partido Unidad Social Cristiana, PUSC), emerged from these events.70

In this modernization project, the creation of the ICE, in 1949, became a cornerstone fulfilling

this task with favorable conditions. First, state responsibility for welfare was combined with the

protection from politicization of implementing institutions (Bull, 2005). Second, the

appropriation and use of natural resources, namely water for hydroelectricity production, was

secured by the ICE’s law (Law 449).

Simultaneously, scientific ecological research and environmental conservation were created in

this period. In the 1940s, the foundation of the University of Costa Rica and the development of

other organizations promoting environmental conservation such as the Inter American Institute

for Agricultural Science, later CATIE (Centro Agronómico Tropical de Investigación y

Enseñanza), gave a national base of support for the green republic’s view. In most countries,

69 In vertically integrated electricity markets/sectors, a single firm owns assets and is responsible for all

aspects of production, sale and delivery of electricity (to include generation, transmission, distribution

and retail) (Dixit et al., 2014). 70 The PLN was founded by Figueres Ferrer and his followers in 1951, while the PUSC had a more recent

origin (1983), though it was founded by the followers of Calderón Guardia, considered “The Father of the

Social Reforms”.

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conservation policies were a mid- and late-twentieth century phenomena (Sterling, 1999). In

this nation, this development came amidst the height of the Welfare state during the period

known as the “Developmental State”.

During the second half of the century, a ‘developmental state era’ was introduced in the country.

This period, between the 1950s and the 1980s, was characterized by state involvement within

the national economy and welfare, as well as the establishment of a series of new autonomous

institutions (Vargas, 2002; Bull, 2005). Since the beginning, Law 449 (1949) laid down the

creation of the ICE with the objective of electrifying the country and creating the necessary

competencies to develop the national energy generation sources, particularly by means of

hydroelectricity.

Electrification was planned in stages, by the ICE, according to the operation of electricity

generation plants. First, priority was on providing services in urban areas or the most populated

settlements in different regions. This was followed by expanding electrification in rural areas

surrounding those urban areas, and eventually expanding to resolve the problem of small

isolated groups not having access to electricity through installations that worked independently

from the interconnected system.71

Furthermore, as pointed out by Schneider (2013), developmental projects were favored with

renewed commercial opportunities for exports during the post WWII period. Prospects returned

to traditional products, but were limited in their potential to raise profits, causing exporters to

begin searching for alternatives. During the 1950s, new products such as beef, sugar, and cotton

increased their share of exports, expanding the agricultural frontier to other regions in the

Pacific lowlands and with greater potential for the application of capital and technology.

However, as in other developing regions, Central American countries experienced the

boundaries of this model, which included high dependency on exports and structural problems

of international trade (i.e. unequal exchange, unemployment and external dependency) (Coronil,

2002). Following Prebish’s ideas and proposals from the United Nations Economic Commission

for Latin America and the Caribbean (ECLAC), countries in the region combined their export-

oriented model with an import substitution model, also known as “inward development”, as a

way to address these problems. The relative weak Central American industrialists were

hampered, compared to larger foreign producers and given small domestic markets, when the

Central American Common Market (CACM) integrated regional markets while establishing

external tariff protections in 1963 (Schneider, 2013).

71 Sistema eléctrico, fuentes energéticas e historia de la electrificación en Costa Rica. (2001). Retrieved

August, 2013, from http://www.cientec.or.cr/ciencias/energia/articulo3.html#solares

97

During this period (1960s), the region moved towards a new growth model based on

diversification of agricultural exports and the promotion of intra-regional trade of manufactured

products, but still highly dependent on imported inputs. The external limits to this model were

partly built into the hybrid strategy of exporting agricultural exports to secure foreign exchange

for the imports necessary to sustain import substitution industrialization. Internally, the

limitations depended on the distribution of surplus between domestic and foreign capital, as

well as the relationship with popular sectors, which determined subsequent patterns and degrees

of social conflicts and state institutions (Torres-Rivas, 2013).

Such internal conditions, in the case of Costa Rica, were highly favorable for state institutions,

as exemplified through the case of the ICE. Fulfilling the state’s developmental goals,

electrification increased, together with a social orientation of electricity pricing and network

developments (Vargas, 2002). The ICE not only benefited from a formal autonomy and good

informal relations with governing elites (Bull, 2005), but also gained legitimation in the

relationship built with popular sectors.

Throughout the import substitution era in 1960s and 1970s, economic expansion and the

industrial demand for electricity and quality was extremely important (Vargas, 2002). As in

other parts of Latin American, the expansion of electricity was based on large projects

exceeding demand requirements (Tissot, 2012). Hydroelectric dams’ economics and technical

characteristics were essential to achieve those electricity goals and were further developed by

means of the government’s access to loans via external debt (Tissot, 2012; Bradford, 2006).

In the electricity production arena, Bull (2005) denotes that the ICE soon became one of the

electricity companies with the highest productivity and the uppermost levels of technological

development in Latin America. During 1963, the telecommunication infrastructure´s operation

was also delegated to the ICE. The electricity coverage increased rapidly thanks to rural

electrification programs, which went from a coverage of 15% of the population in the 1940s to

nearly 50% in 1970, and subsequently reaching over 70% of the population in 1980 (ICE,

2013b).

At the same time, this period gave birth to the first protected areas and forest conservation

policies in the country that are milestone in Costa Rica’s conservation history. The Institute of

Tourism (Instituto Costarricense de Turismo, ICT) was created in the 1950s and the first

wildlife legislation was passed during this period as well (The Wildlife Conservation Law of

1956). The Forestry Law in 1969 established a system to designate protected areas.72

The Law

72 Other consideration was given to wildlife issues in the 1970s, when the Costa Rican legislature

endorsed international treaties regarding threatened or endangered species, for instance Law 5605 (1975)

for the Convention on International Trade in Endangered Species of Wild Fauna and Flora.

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was revised, in 1983, eliminating the understanding of wildlife as a simple natural resource and

implementing stronger hunting regulations (Sterling, 1999).73

Sterling (1999, p. 10) indicates that the “utilitarian multiple-use perspective of conservation”

was present since the origin of natural parks and protected areas with the Forestry Law (and its

revisions). Within this law, logging and recreation are considered high management objectives

of forest reserves. Other forest purposes were eventually incorporated, highlighting the

importance of national parks and other protected areas in sustaining life, such as oxygen

production and public health, preservation of biodiversity and life zones, as well as the

production of scientific data.

This legislation was followed by the creation of the first National Parks (i.e. Cahuita National

Monument in the Caribbean coast; Poás Volcano in the Central Valley, and Santa Rosa National

Park in the North Pacific region). As noted by a biologist and conservationist “all possible

arguments were used in the lobbying to support the creation of natural parks and a national base

of support for conservation, including tourism…” (Interview 3A, 2013). Fundraising, on an

international level, was promoted in order to support the project and obtain the resources to

acquire land for national parks and consolidate the system in the years to follow. Although

international organizations were reluctant to provide capital for this purpose, they offered

funding to support research projects (i.e. UNESCO, The World Wildlife Fund, UICN).

Nonetheless, the situation of state policies became complicated with the international crisis of

the 1970s that produced inflationary processes, devaluation and scarcity of state resources.

Social disparities enlarged as real wages declined and the cost of basic goods increased.

Demand for agricultural exports fluctuated widely and several shocks exacerbated the situation,

including an increase in the prices of key inputs such as petroleum, while governments

influenced economic activity in a more direct manner (Schneider, 2013).

The economic and institutional developments of this period (1970s) are important to understand,

not only the consolidation of the ICE as a state institution, but also the emergence of tensions

with elites and party politics. According to Bull (2005), on the one hand, political elites were

struggling to influence the operation of institutions to a larger extent. On the other, the ICE

gained a reputation with opposition parties and members of the old elite who assumed positions

in this institution.

In the midst of the 1970s’ crisis, governments also had to contend with revenue pressures of the

national industry that emerged under an era of state protection. According to Bull (2005), Costa

73 In 2012, a new law prohibiting sport hunting in the country is the first passed by Popular Initiative

procedures. Popular Initiative is the constitution provision for the people to push for new laws, and

environmental regulations, as well as provide local input on the implementation of new laws.

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Rican businesses emerged as suppliers to autonomous institutions with reduced competition

from abroad and increasingly depended on political connections. As an example of

industrialists’ power, the author notes that the Chamber of Commerce lost influence compared

to the Industry Chamber, whereas in 1975 an umbrella organization, the Costa Rican Union of

Private Enterprise Chambers and Associations (UCCAEP), was created.

At the same time, party politics started struggling to regain control of autonomous institutions

and strengthen their link with the Central Government. This trend was also influenced by

international planning concepts that were implemented in order to ensure the optimal use of

scarce resources.74

Nevertheless, the ICE continued to have a special place within the

Presidential discourses “as a symbol of the heroism of the Costa Rican development project”

(Bull, 2005, p. 93). The following newspaper text, citing President Figueres Ferrer’s remarks

about the construction of a tunnel from one of the dams in the 1970s, illustrates this:

“It is a victory, repeated Figueres, of man over rocks, water, and the harshness of

weather. These are heroes, he said (referring) to the workers”. (La Nación 28 March

1974, quoted in Amador, 2000, p. 4).

In addition, during this period, geothermal energy became part of the renewable sources pool

according to the Law 5961 of 1976, laying down the foundations for research, exploration, and

exploitation of geothermal resources as activities exclusive to the ICE. Moreover, the ICE also

gained a reputation for its redistributive role and its potential to provide subsidize electricity in

poor and rural areas, financed by the profits resulting from telecommunication (Bull, 2005).

Therefore, the ICE gained a broad social base of legitimation on behalf of the Costa Ricans.

The extended autonomy of the ICE produced the unintentional consequence of converting the

institution into a political actor, resembling “a state within the state”, as depicted in its nickname

‘the autonomous republic of the ICE’ (Bull, 2005, p. 91). This aspect became important in the

shaping of future political events and institutional developments of the electricity sector.

Furthermore, in 1981, the country had accrued one of the largest per capita debts in the world,

mainly due to deficits incurred by state institutions of which the ICE had one of the largest.

The financial situation of electricity utilities, all over the region, deteriorated rapidly when

inflation eroded their incomes and governments were reluctant to increase tariffs (Tissot, 2012).

Continued pressures from the International Monetary Fund (IMF) resulted in the declaration of

a unilateral debt moratorium by President Carazo Odio (1978-1982, Unity Coalition Party,

PCU), only one year before Mexico sparked the global debt crisis. However, pressure from

74 The chief of the executive’s limitations were highlighted by external consultants as one of the main

problems of the country’s public administration (Bull, 2005).

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international financial institutions (IFIs) regarding the evolving debt crisis continued and

tensions over state institutions became greater, increasing the ICE’s budget control. The World

Bank (WB) and the Inter-American Development Bank’s (IDB) vision went along the same

lines in separating telecommunications and electricity, stating that the telecommunication sector

had increasing possibilities of obtaining private financing (Bull, 2005).

In addition, neoliberal ideas from the late 1970s and 1980s started to permeate the region

(Leiva, 2008). According to neoliberal pursuers, the purpose of modernization through

industrialization as proposed by structuralism and state-led industrialization, from the 1940s and

1960s, had deficiencies that markets and price signals could resolve on their own. In 1982,

Chile became the first country to deregulate and privatize electricity, followed by a trend of

liberalization reforms in most countries of the region.

Although affected by similar pressures over privatization, events unfolded differently in the case

of the ICE. Essentially, financing issues worsened when President Arias Sánchez’s first

administration (PLN, 1986-1990) decided to halt external loans for the ICE and forced the

purchase of state bonds, subsequently leading the energy sector into a critical situation.

However, the relation with elite groups and IFIs esteemed the differences between Costa Rica

and other countries regarding state-owned institutions and continued favoring the ICE’s

autonomy (Bull, 2005).

With the creation of the Energy Planning Sector, in 1983, the electricity infrastructure’s

development continued during the 1980s, as stated by the mandatory central plans, headed by

the Energy Sector Administration (Dirección Sectorial de Energía, DSE). Besides the DSE, the

Energy Planning Sector was comprised of the Ministry of Natural Resources, the Ministry of

Planning, the ICE, the RECOPE, the SNE, and the National Council of Research in Science and

Technology (Consejo Nacional para Investigaciones Científicas y Tecnológicas, CONICYT).

Under their mandate, physical transmission facilities and distribution infrastructure were

planned and developed using cost structure and budget constraints as guiding criteria.75

A structural perspective on the crisis also evidenced a development contradiction regarding the

growth model, the allocation of resources and the distribution of surplus generated by economic

activities. For instance, in the late 1970s, over 90% of all land was associated with the cattle

industry, while its production accounted for only 12% of total agricultural exports (Sterling,

1999). At the same time, major multinational corporations were controlling export products (i.e.

banana and timber), while not enough crops were produced to fulfill the country’s needs

(Schneider, 2013; Sterling, 1999).

75 Sistema eléctrico, fuentes energéticas e historia de la electrificación en Costa Rica. (2001). Retrieved

August, 2013, from http://www.cientec.or.cr/ciencias/energia/articulo3.html#solares

101

Furthermore, from 1950 to the 1980s, Costa Rica sustained enormous environmental damage

related with its agricultural development (Hein, 1993; Sterling, 1999). One crucial indicator was

the high deforestation levels.76

Similar to Brazil, extensive livestock production was the main

cause of deforestation in Costa Rica (Coronil, 2002). The banana and timber industries were

also responsible for massive deforestation, also including pollution, loss of wildlife habitat,

degraded worker conditions, and other social problems. Sterling (1999, p. 39) cites former Costa

Rican President’s statement, in 1987, “we deplore the sad leadership we possess towards

destroying our forest”.

Of special interest to this research, deforestation was also associated with the decrease in

watershed water quantity and the consequent reduction in hydroelectric generating capability.77

As of 1949, Sterling (1999) documented a decree, issued by the reigning Junta, in order to

establish a Forest Council which was given the task to register forest resources and protect

forested watersheds. Although this was not established in practice, a similar division was

ascribed to the Ministry of Agriculture and Livestock, which remained until the mid-1990s.

In the 1980s, two opposing trends were challenging Costa Rica’s image of a “green republic”.

On the one hand, in this decade, Costa Rica had more protected areas and more personnel

working on conservation issues than any other Central American nation. On the other hand, the

country’s deforestation rate per year was among the highest in the world during the same

period.

Among the social implications of the growth model’s development contradiction were

unemployment of workers whose services were no longer required, forced migration when the

land was exhausted, and a vicious circle that encouraged rainforest destruction and poverty

(Hein, 1993; Schneider, 2013). Protected areas were not exempt of these patterns related to

subsistence activities of squatters (i.e. underprivileged settlers colonizing farmlands) who

occupied private and state lands in order to seek for ways to shelter and feed their families

(Sterling, 1999). The social movement’s origin was also associated to the enclave economy

extended in the Caribbean and the Southern region (Sanchez, Zuñiga & Cambronero, 2010).

The Southern region, in particular, has been the arena of recurrent conflicting processes.

Considered one of the poorest regions in the country, the area is also permeated by indigenous

movements and problems concerning land tenure, forest invasion, and conservation issues.

Mobilizations against the transnational Aluminum Company of America (ALCOA) and the

76 During the 1980s, deforestation levels in Central America were the highest of the tropical regions and

similar to those in West Africa (Hein, 1993). 77 As early as 1888, a decree to protect watershed areas in mountains and the Fire Law in 1909 already

understood the connection between forest coverage and water supply (Sterling, 1999).

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foreign-owned logging firm, Ston Forestal, took place in this region during the 1970s and 1990s

respectively. Both are considered milestones in the social movements’ national history.78

In the case of ALCOA, protests were originated by locals opposed to the company’s extractive

activity. The construction of the largest hydroelectric plant in Costa Rica’s history, the Boruca

dam (1500 MW), is associated to this event. The project was originally planned, by the ICE, in

combination with one of the aluminum exploitation plants to be located in the county of Perez

Zeledón, Southern Region. As the project took shape in the Assembly, the resistance movement

grew incorporating university students and worker unions. Heavy protests, against these

projects, eventually convinced ALCOA to pullout of the country (Carls & Haffar, 2010).

Additionally, the 80s was also a period of civil wars in Central America, with the exception of

Honduras and Costa Rica. Conflicts devastated the countries’ economies and disrupted the

integration of regional markets and production (Schneider, 2013). In the aftermaths of these

wars, transformations in the growth strategy of the region and a new pattern of international

insertion took shape, largely based on a continued expansion of exports.

More dynamic export opportunities were also supported by international actors, especially the

United States and multilateral institutions. International loans and aid came with conditions

favoring a neoliberal agenda and a new model for the re-insertion into transnational chains, such

as Structural Adjustment Programs (Schneider, 2013).79

These strategies were based on trade

liberalization, privatization and deregulation, as well as the promotion of non-traditional

products through the creation and/or support of free trade zones (Leiva, 2008; Schneider, 2013).

Also, as in many other developing countries with limited mineral resources, Costa Rica began to

promote the development of its tourism industry (Hein, 1997).80

In summary, the center of conflictual processes derived from Costa Rica’s “green republic”

(1800-1989) is rooted in structural characteristics of the growth model that confront

land/resource intensive production patterns, employment and environmental conservation.

Nonetheless, the incursion of the neoliberal agenda, together with new global dynamics,

transformed the country in many ways. Within the electricity sector, relationships between

neoliberalism and environmental conservation devise the energy sector’s policies. Moreover,

78 Ston Forestal began planting beechwood (Gmelina arborea), in the early 1990s, aside from acquired

land in Golfito (South Pacific), the company also leased several hectares from local farmers to plant trees

for later logging (“Ticos exigen $26 millones a Stone Container”. El Financiero, 10.10.2014). 79 Costa Rican governments signed agreements with IFIs, as of 1985, through structural adjustment loans

from the World Bank as part of the first Structural Adjustment Program (SAP I). Followed by SAP II in

1988 and SAP III in 1991 (PAE III). 80 Expanding exports were not only made up of traditional products such as coffee, bananas, cotton,

sugar, and meat, but also nontraditional agriculture such as palm oil, seasonal fruits and vegetables

(Schneider, 2013).

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the incorporation of new actors and interests also impacted future developments, as described in

the following section.

5.3.2 Steps towards a Carbon Neutral Nation

Costa Rica’s first steps of as a “carbon neutral nation” were distinguished by the entanglement

of liberalizations reforms, conservation policies and the emerging environmental global

governance discourse. The legacies of the ‘green republic’, in the electricity sector, were

displayed in the carbon mitigation strategy of the country, largely based on forest conservation

and the expansion of hydroelectricity. However, this approach also unleashed latent conditions

of social conflicts.

The Costa Rican society began to move more intensively towards markets as of the mid-1990s

(Rovira, 2007). The most significant reforms, in the electricity sector, were implemented during

the administrations of ex-presidents Calderón Fournier (1990-1994, PUSC) and Figueres Olsen

(1994-1998, PLN) thanks to the approval of Laws 7200 (1990), 7508 (1995), and 7593 (1996).

These and subsequent reforms, in the sector, were gradually including new actors in the

provision of electricity and also improving public entities competencies.

In 1990, Law 7200 (Costa Rican Law Authorizing Autonomous or Parallel Electricity

Generation) incorporated private investments in electricity plants of up to 20 MW capacity.

According to the Law, the selection and incorporation of private projects is approved by the

ICE, through public procurement procedures, mediated by an electric power purchase contract.

In 1995, Law 7508 modifies Law 7200 adding a Second Chapter (Electric Power Purchasing in

a Competitive System) which authorizes the ICE to buy electricity blocks of a maximum 50

MW from generation plants owned by private enterprises. In this case, the selection is made by

competition and a BOT contract scheme (DSE, 2008a).

Both, electricity generation and BOT projects should not exceed 15% of the total installed

capacity of electricity generation from the NES (DSE, 2008a). Another requisite is a minimum

35% of national ownership of the total project investment. Furthermore, Law 7789 (1998)

establishes the regional public service company of the province of Heredia (Empresa de

Servicios Públicos de Heredia, ESPH), while Law 8345 (2003) regulates the participation of

rural electricity cooperatives and public municipal companies in different stages of electricity.

In the meantime, Law 8660 (2008) allows associations and strategic alliances between public

and private entities.

In terms of renewable energy use, this regulatory framework (Law 7200, 1990) authorized the

ICE to buy electricity from private companies whose primary energy sources are

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hydroelectricity, geothermal energy, wind energy or another non-conventional renewable source

(from now on referred to as alternative renewable energy sources, ARE).81

New legislation also

incorporated consumption tax exemptions to promote the rational use of energy and renewable

energies at end-user or retail level (Law 7447, 1994 Ley Reguladora del Uso Racional de la

Energía).

In addition, these Laws introduced an authorization, in the form of a public service concession,

for electric generation or distribution; a price system, which created competition among

electricity generators; and they also established institutions for their coordination changing the

composition of the Energy Planning Sector. The Regulatory Authority for Public Services

(Autoridad Reguladora de Servicios Públicos, ARESEP), created with Law 7593 (1996

reformed in 2008), substituted the former SNE as the regulator responsible for pricing, quality

control, and technical norms in providing the service.

Figure 5. Structure and regulation of the electricity sector


The public service concession, sanctioned in the ARESEP Law, is granted by the state through

the Ministry of Environment (Law 7593, 1996, Chapter 5, incise A). In the case of

hydroelectricity, investors also need a water concession for the use of public state property,

81 A non-conventional renewable source is defined, by law, as all sources that use any basic element,

except fossil fuels, mineral carbon or water for energy production.

105

given the special condition of water as a public good.82

However, when the SNE was substituted

by the ARESEP it left a legal void in terms of water concessions. Figure 5 illustrates the

structure and configuration of actors in the electricity sector.

Additionally, companies became subject to perform accordingly to other requisites established

in the Environmental Impact Assessment (EIAs) studies approved by the National Technical

Secretariat Office for the Environment (Secretaría Técnica Nacional del Ambiente, SETENA).

The SETENA office is an autonomous institution, ascribed to the Ministry of Environment,

created by the Environment Law, in 1995, whose purpose is to regulate environmental impacts

of economic and production activities, including their relevant infrastructure (Arts. 17-24, Law

7554, 1995). Electricity producers also need the EIAs’ approval as a requisite to obtain the

public service concession.

The notion of having a national technical entity that uses scientific information to assess

environmental impacts of economic activities was compatible with international commitments

acquired at the 1992 Rio Declaration on Environment and Development, signed and ratified by

Costa Rica. Therefore, SETENA became a new actor incorporated in the group of sector

regulators. Since then, electricity regulation is executed by ARESEP, who sets the tariffs and

ensures the quality of the services in consultation with the ICE. In turn, the ICE grants

eligibility conditions of the projects according to the National Energy Plan, along with the

Ministry of Environment’s approval of the EIAs (Law 7593, 1996).

Private investors had organized themselves, early on, in the Costa Rican Association of Private

Energy Producers (ACOPE), a non-profit organization created in 1990 to promote the interests

of the private members they represented (Interview 4G, 2013). The association took an active

part in issuing Law 7200 (1990) and subsequent reforms, including the formulation of auctions

and contracts that allowed the integration of private electricity producers. Affiliate associates,

from ACOPE, include private electricity suppliers of renewable energy, consulting and legal

organizations, construction contractors, providers and financial entities in the energy sector.

The 1990s were also active in regards to environmental protection as the Assembly passed a

considerable amount of correlated legislation. According to Lindo (2006), bearing in mind that

the promotion of hydroelectricity developments also has particular environmental risks, the

focus of the Laws was placed on regulating impacts on watersheds and the environment in

general. Most relevant were the Wildlife Conservation Law in 1992 (Ley de Conservación de la

82 This is protected by the Water Law (1943), the Constitution (1949) and the Law of the National

Electricity Service (1941).

106

Vida Silvestre, Law 7317, 1992) and the Law of the Environment in 1995 (Ley Orgánica del

Ambiente, Law 7554, 1995).83

During this period, the consolidation of protected areas continued as well. In 1994, the Costa

Rican National System of Conservation Areas (Sistema Nacional de Areas de Conservación,

SINAC) was created. Between 1991 and 1999, national protected areas increased in extension

from 21% to 25% (INBio, 2004). Other data, from 1995, estimates 28% of land designated as

legally protected land, of which 11% corresponds to national parks, 4% to indigenous

territories, and 13% to other categories of protection (Sterling, 1999). These figures also include

privately-owned protected areas.

The category of indigenous reserves is included within the protected areas system of SINAC, as

several protected areas are within the indigenous territories, though each of them has their own

regulatory framework. The government formed the National Commission on Indigenous Affairs

(Comisión Nacional de Asuntos Indígenas, CONAI), in 1973, in order to oversee the

administration of the nation’s 22 indigenous reserves (and 36,350 people) (Sterling, 1999). The

Indigenous Law of 1977 (Law 6172) laid down the use of the land , rights, and restrictions to

these territories, while the Forestry Law (Law 7575, 1996), the Natural Parks Law (Law 6084,

1977), and the Environmental Law (7554, 1995) established regulations on natural protected

areas.

Nevertheless, there is a closer relationship between natural protected areas and indigenous

populations. In Central America, it is estimated that 40% of indigenous areas overlap

conservation areas.84

Similar to the case of natural protected areas, indigenous territories have

confronted problems with logging and mining inside or nearby their reserves, especially in the

Terraba Reserve (Southern region of Costa Rica). Different indigenous organizations have been

voicing demands to strengthen their autonomy, enforce regulations over indigenous land, as

well as for state support to develop production activities and improve their livelihoods.

Meanwhile, following the emerging global environmental governance, in 1992, a delegation of

Costa Rican Indigenous organizations attended the United Nations Conference on Environment

and Development (or “Earth Summit”) in Rio de Janeiro, Brazil, to voice their concerns and

demands. They rallied the support of different native groups from the United States, Mexico and

Guatemala, who organized protests, in Costa Rica, a few months after the summit. Other

demonstrations ensued, including the largest one in 1996, although with very little attention

from the press (Sterling, 1999).

83 Other laws included the Forestry Law and its reforms (1996) as well as the Biodiversity Law (1998). 84 “Actualizarán mapa de áreas indígenas y zonas protegidas de Centroamérica”, CRHoy, 06.12.2014.

107

On a national level, the environmental movement was consolidated, as a sector, during this

period (Sterling, 1999). Yet, environmental organizations that emerged in the 1980s and 1990s

focused more on specific demands, at local levels, than on global transformations (Sanchez et

al., 2010). Some of these organizations sprang from the communities immersed in conflict

processes, particularly in relation with water management, rivers, and hydroelectricity.

For instance, the Costa Rican Ecologist Federation (FECON), created in 1989, became an

umbrella organization constituted by a network of Costa Rican environmental organizations

(reaching 30 member organizations in 2013). The organization became a key actor in the

process for political maturity of environmentalism in Costa Rica (Sterling, 1999). In the next

few years, FECON grew in experience, regarding collective actions and agenda coordination,

gaining relevance ahead of other political actors as well as the state itself. 85

The construction of initiatives and the incidence of environmental organizations supported by

FECON, such as the Citizens Environmental Management Commission in 1993 (i.e. Comisión

Ciudadana de Gestión Ambiental) and the Environmental Advocacy Network in 1995 (Red de

Defensoría Ambiental), contribute to the development of technical and political capacities of the

environmentalist sector. These experiences also strengthen their position, before the legislative

agenda, in several environmental laws passed during this period.

In fact, environmental organizations also expressed concerns regarding the Water Law (Law

276), a key normative that regulates water uses, particularly regarding the need to control water

disposal and regulate groundwater, which accounts for 70% of the total drinking water supply.

The Water Law remained, without substantive reforms until 2014, despite bill proposals since

the 1990s that demanded an integral reform of this legislation on behalf of environmental

organizations and academia.86

Basically, the introduction of liberalization reforms already exacerbated social tensions,

especially in rural regions (Sanchez et al., 2010). A relevant case occurred, in the Southern

region, when in 1996, several communities in Perez Zeledón created a River’s Defense

Committee (Comité de Defensa de los Ríos) against “Los Gemelos” private project and the

protection of the Chirripó Pacífico River watershed (Municipalidad de Pérez Zeledón, 2013).

The Committee submitted a writ of amparo and a constitutional appeal to the Constitutional

Court, whose resolution, in 2000, paralyzed private hydroelectric developments. The problem

85 Breve descripción de la FECON. (2007, February 5). Retrieved October, 2013, from

http://www.feconcr.org/index.php?option=com_content&task=view&id=12&Itemid=30 86 “Nueva Ley de Aguas: urgencia nacional”, La Nación 08.08.2013.

108

was partially solved by the Constitutional Court’s amendment (i.e. Voto 2000-10466) (Alvarez,

2013).87

In the 1990s, environmental mobilizations also emerged, in other regions of the country,

opposing hydroelectric projects (e.g. the Pacuare HP in the Central Caribbean, the Pirrís HP and

the Savegre HP in the Pacific), open pit mining in Miramar de Montes de Oro (i.e. Central

Pacific region), and oil drilling in the Southern Caribbean region (Sanchez et al., 2010; FECON,

2014). In 2002, another mobilization took place, opposing open pit mining, in Crucitas de San

Carlos (Northern Region) (Isla, 2002; Alvarez, 2013). Those latent conflicts resulted in legal

processes, some still underway (i.e. between grass-roots organizations and the local subsidiaries

of Canadian mining companies), while oil drilling is banned in the country until 2021.88

Conversely, those examples also illustrate the duality of the government environmental

discourse and its utilitarian use of natural resources. While it promotes conservation policies

and forest protection, it also encourages foreign investments in oil (and mining) explorations.

For example, in 1994, the Assembly sanctioned the Hydrocarbons Law (7399), which promoted

and regulated oil and any other hydrocarbon exploration and development, declaring it a public

interest (Cajiao, 2002). This also reveals that in terms of energy, the political elite’s position

has been ambiguous.

The environmental movement gained strength with the integration of environmental

organizations that became aware of those new concerns and challenges (Sanchez et al., 2010).

In the 2000s, local problems and the defense of water resources became a central axis for

collective actions concerning the construction of hydroelectric plants; the conflict between

tourism and drinking water (i.e. community of Sardinal in the Northern Pacific region), as well

as water contamination (i.e. aquifer Barba, Central region) (PEN, 2006). Since 2000, Costa

Rica’s environmentalism was characterized by conflictual process derived from the

environmental movement struggles against the development model.

The country’s exports shifted towards higher value goods, as the country attracted more

sophisticated firms that could take advantage of the Costa Rican workforce’s higher rates of

literacy and education, after decades of investment in education and welfare (Hein, 1997;

Schneider, 2013). This country’s profile was consolidated, in 1997, with the installation of

electronic goods manufacturing, such as INTEL and Hewlett Packard, as well as medical

87 The new reform establishes that the Ministry of Environment is the sole authority to grant the water

concession. However, according to the constitutional writ, the Ministry’s authority was against

established normative, such as environmental impact assessment, citizens’ consultation and Municipal

competences over its territory. 88 “Ticos exigen $26 millones a Stone Container”, El Financiero, 10.10.2014. “Luis Guillermo Solís

extiende moratoria a explotación petrolera hasta el 2021”, La Nación, 25.07.2014.

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equipment and automotive parts. Valves, electronic tubes and tourism became an important

source of foreign exchange (Schneider, 2013).89

Compared to more capital intensive products, which boomed in the 1950s and 1960s,

contemporary nontraditional products require greater technology, standardized production

techniques, and financing alternatives. At the same time, greater exports diversification together

with the economic modernization process produced other environmental problems. Besides

continued high use of pesticides, they also include remarkably high use of water per capita in

irrigation and tourism (Hein, 2008).

Those structural changes resulted in a number of impacts on labor force, urban-rural

composition, migration, and consumption patterns that are difficult to assess (Schneider, 2013;

Hein, 1997). For instance, the tourism boom, with the globalization of leisure and travel,

became an important source of foreign exchange, but with controversial consequences on

development (Hein, 2008; Schneider, 2013). Schneider (2013, p. 33) refers to tourism

drawbacks, including minimal technology and skill transfer, limited job productivity and wage

potential, speculation in land and homogenization of culture. As a result, international tourism

consumption squeezes resources for producers and local communities.

As most population migrated to the cities, another consequence of these changes is reflected in

the rise of energy consumption (Hein, 2008; 1997). The use of electricity in the residential,

commercial, and public sectors rose from 10% in 1970, to over 50% in 2005 (DSE, 2008b).

Within total energy consumption, electricity reached 17% in 1990 and 20% in 2005, while the

use of oil derivatives, as an energy source, remained stable, around 60%, during the same period

(DSE, 2008b).

Costa Rica entered into this growth strategy dynamics, with relative success, while keeping the

signature of the ‘developmental state era’, particularly in the electricity sector. As remarked by

Bull (2005, p. 82) “By the beginning of the millennium it (Costa Rica) could be considered a

last refuge of state ownership in Latin America”. Electricity and telecommunications remained

under control of a state-owned company, the ICE, and the private sector had only been allowed

to participate in some parts of the business.

However, new challenges were affecting the organization internally and the electricity sector, as

a whole. First, the ICE was under pressure of increasing financial controls, much as a result of

the state reform under the Structural Adjustment Programs (SAPs) and deepening privatization

trend (Solís, 2002). Second, there were challenges to handle the technical revolution in the

89 In the year 2000, valves and electronic tubes were the single largest generator of foreign exchange,

while as percentage of the GDP’s net tourism receipts peaked at over 9% (Schneider, 2013).

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telecommunication and electricity sectors leading to an increase in plant size and subsequently

requiring larger investments (Bull, 2005).

Effectively, by the year 2000, the ICE had plans for two of the largest hydroelectric generation

projects, the Angostura HP and the Boruca HP. Similarly, the institution dealt with several

privatization attempts, a project led by the governing political elite. The two processes (i.e.

liberalization reforms and the expansion of electricity projects) converged in the events of the

“ICE Combo”.

Several privatization attempts began, ever since the presidency of Arias Sánchez (PLN, 1986-

1990), and did not dismiss the importance of ICE top managers’ personal motives in support of

the institution’s privatization (Solís, 2002; Bull, 2005). These attempts met fierce resistance

from the workers unions and the general public. One of the major privatization clashes was, in

2000, when a law reform known as the “ICE Combo” was presented during President Rodríguez

Echeverría’s government (PUSC, 1998-2002).

It was very likely that the proposal may have become a law in the second debate, but it was

dismissed, after strong opposition, due to differences between political parties and the

Constitutional Court’s declaration of vicious procedures (Solís, 2002; Carazo, 2001).90

Mobilizations, against the ICE Combo, are considered the first multi-sector alliance between the

ICE’s labor union and the environmentalist sector (Cartagena, 2010). With this group effort,

worker unions got the support of a traditional coalition of environmentalists, community groups,

rural and indigenous people, whose major concerns were the proposal’s environmental

implications. Specifically, they rejected the promotion of large hydroelectricity plants and the

exploitation of geothermal energy in natural protected areas (Carazo, 2001; Cartagena, 2010).

On a national level, between 1998 and 2002, the ICE was immersed in negotiations with

indigenous communities concerning the Boruca dam. In the analysis of the Boruca HP case,

Carls &Haffar (2010) consider this as one of the longest processes of conflict resolution in the

country and also a costly one, starting since the 1970s when the ICE began studying the project

and investing over US20 million dollars into the project. The project was planned in the Térraba

River (Southern region) and was associated with severe negative effects, mainly by flooding a

vast area (i.e. 25000 hectares) which included parts of three indigenous reserves, as well as

roads and infrastructure in another four reserves.

In the aftermath of the ICE Combo, the Boruca HP plan slowed down in the following years,

given the strong opposition that rose from different groups and international organizations,

90 A pact between the two main traditional political parties, PLN and PUSC, to support the proposal was

behind this outcome (Carazo, 2001).

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mainly from the affectation of indigenous territories. Furthermore, in 2000, the “ICE Combo”

process coincided with the release of The World Commission on Dams (WCD) report that

spurred global dynamics. International movements organized themselves in networks to support

affected communities against dams. Through this report, social movements against dams were

echoed, on a global level, highlighting the elevated cost of dams for displaced people,

downstream communities, taxpayers and the environment, stating that “in too many cases an

unacceptable and often unnecessary price has been paid to secure those benefits” (WCD, 2000,

p. 310).

While actors, in the electricity field, focused on those local challenges, the Costa Rican

government became actively involved, during the initial implementation phases of the Agenda

21, the Kyoto Protocol, and the United Nations Framework Convention on Climate Change

(UNFCCC) (Landreau, 2006; Martin, 2004). These initiatives were established at the 1992

“Earth Summit”, along with the Intergovernmental Panel on Climate Change (IPCC), promoting

environmental protection and the goal to offset greenhouse gas (GHG) emissions at a global

level (Martin, 2004).

In the next few years, the country endorsed international agreements for environmental

protection, including the Convention for the Protection of the Ozone Layer (1991) and the

Convention on Biological Biodiversity (1994). Through the use of joint implementation (JI)

strategies and clean development mechanisms (CDM), derived from the Kyoto Protocol (signed

and ratified by Costa Rica between 1998 and 2002), the nation started an early cooperation with

industrialized countries in order to offset GHG emissions (Landreau, 2006). Costa Rica became

the first developing country to participate in arrangements based on international associations in

which private businesses, government agencies, and nongovernmental organizations (NGOs)

undertake joint mitigation or sequestration activities in a host country, in order to promote their

mutual interests (Martin, 2004).

The country then turned to the implementation of sustainable development, in domestic policies

connected to those international mechanisms, as a new vision for addressing environmental

degradation and economic underdevelopment. The expression “development in harmony with

nature” in vogue during this period reflected these ideas (Martin, 2004, p. 161). The phrase was

recorded for posterity, since the creation of the policy think-tank Programa Estado de la

Nación, in 1994, an independent initiative that became institutionalized with the support of

national universities and the United Nations. 91

91 The program publishes an annual evaluation regarding the situation of the country’s sustainable human

development, including an environmental chapter under the label “harmony with nature”.

112

Mitigation strategies in the country generally fall into two categories. The first concerns land

use, which means increasing a given area’s potential to fix carbon (planting trees) or preserving

natural carbon stocks (forest, soil threatened by destruction). The second is based on energy

projects, which alternate fuel sources or use of renewable energy that decrease the use of

carbon-based fuels (Martin, 2004).

Costa Rica took advantage of these climate change instruments, with particular success, within

the first category based on land use. Less attention was given to promote transformations in the

energy field, which in the case of electricity, was already using low carbon fuel sources thanks

to hydroelectricity. In part, this explained the relatively few projects with GHG potential for

reduction, in the energy sector, registered by the Costa Rican Joint Implementation Office

(OCIC) in 1998 (Landreau, 2006).

On the same track, the country was a pioneer in the development of the Payments for Ecosystem

Service (PES) program, which implied selling emission reductions through the instrument of

Certifiable Tradable Offset (CTO) (UNDESA, 2012). In accordance to the Forestry Law (Law

7575), the national PES promoted forest conservation and regeneration, based on the

implementation of market mechanisms, translated into economic incentives for landholders to

be compensated for providing ecosystem services (i.e. environmental protection). Funds for

landholders’ compensations have been generated by fuel taxation, grants and loans from

national and international institutions, agreements with the private sector and additional charges

to water users. 92

With the application of this instrument, the Costa Rican policy gained national and international

recognition in regards to the country’s conservation strategy. Costa Rica’s PES initiative has

been ascribed as playing an important role in reducing the nation’s deforestation levels. As

pointed out in a report from the United Nations Department on Economic and Social Affairs:

“(…) prior to 1992 (Costa Rica) had one of the highest rates of deforestation globally,

however the establishment of an innovative national PES program later that decade has

been a major contributor to a dramatic reduction in forest loss. This has involved a

direct shift in economic focus from agriculture to ecotourism – something which larger

countries have struggles to replicate. Moreover the successful implementation of this

program has been dependent on various other structural conditions including amongst

others political stability, high investment in education and agricultural reform. The

absence of these conditions, in many other developing forest rich nations, would appear

92 Pago de Servicios Ambientales. (2014). Retrieved November, 2014, from

http://www.fonafifo.go.cr/psa/index.html.

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to be a major reason for absence of effective woodland related to the PES program.”

(UNDESA, 2012, p. 113).93

Nonetheless, changes in the growth model also helped to ease deforestation trends and its severe

effects on local, regional and global ecosystems, through reducing GHG emissions, shifting

from dominant primary exports to a greater share of assembly manufacture and nontraditional

products (Hein, 2008; Schneider, 2013). At any rate, the success attracted international funds to

support ‘green policies’, as well as interest from environmental organizations on a global scale

(Martin, 2004; UNDESA, 2012). The national environmental strategy continued focusing on the

conservation of watersheds and natural areas, but currently, not only for conservation goals, but

also for carbon mitigation.

Beyond the domestic boundaries, after a long-discussed integration effort, the Central America

Energy Interconnection System (SIEPAC), an energy infrastructure project to build a

distribution line from Panama to Mexico, has picked up speed (Martin, 2010). Since 1998, the

initiative is led by a consortium of public and private companies from Central America, Mexico,

Colombia and Spain, supported by funds from the IDB and the CABEI, and is currently at the

final construction stages. The project’s goals are firstly, to support the consolidation of a

Regional Electric Market (MER) and to facilitate the participation of private investments in

electric generation capacity, and secondly, to establish the infrastructure that allows exchanges

among participants. The rationale behind SIEPAC is to reduce dependency on imported sources

through scale economies in “a region endowed with plentiful water resource” (Martin, 2010).

The project’s design has been criticized, by environmental organizations and some experts,

based on the assumption of the SIEPAC and the MER that private initiatives will improve

services through efficiency and price competition, but its main beneficiaries will be

transnational corporations that will benefit from logistic and price subsidies.94

The SIEPAC has

encountered major obstacles in Costa Rica, where the last lines were still under dispute.

Moreover, in Costa Rica, the participation of actors in the MER is restricted to the ICE,

according to regulation, but pressures to deregulate the Costa Rican electric sector are strong

and transcend national interest.95

The issue of telecommunication and electricity liberalization emerged, again, in the context of a

package deal included in the Central American Free Trade Agreement (CAFTA) with the

93 More recently (2005), the initiative on Reducing Emissions from Deforestation and Forest Degradation

(REDD) in developing countries has been promoted by the Rainforest Coalition, lead by the governments

of Papua New Guinea and Costa Rica, and supported by numerous other forested nations (UNDESA,

2012). 94 2009. “La geopolítica de la apertura del mercado de electricidad”. Kioscos Ambientales UCR 95 “País completará en julio red para intercambio regional de luz” La Nacion, 18.05.14

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United States. This time, the project of electricity liberalization was embedded in a broader

scheme of the free trade agreement and it separated main line telephony and electricity, from

mobile telephony and internet services (Hoffman 2007). Moreover, the agreement left the issue

of private - state participation, in the electricity sector, as a matter of domestic ruling (Lindo,

2006).

However, different sections of the text were considered a threat in terms of environmental and

social implications, particularly because, according to the Costa Rican Constitution,

international agreements surpass domestic laws, and hence, the CAFTA divided the society and

raised concerns from different angles (Lindo, 2006). Those apprehensions generated social

mobilizations since the beginning of the agreement’s negotiation and after its ratification during

2006 and 2007, including protests led by heterogeneous groups of actors demanding the

government to remove the CAFTA from the Congress (Lindo, 2006; Sanchez et al., 2010).

The range of actors, who participated in protests against the CAFTA, included public

universities, environmental and labor unions, students, as well as organizations of national

producers, opposition political parties, women and other forms of social organizations.96

They

identified diverse concerns regarding threats to public institutions (i.e. health, education,

telecommunications, and insurances), the vulnerability of labor and environmental laws, and the

sovereignty in areas such as food safety and indigenous awareness. The marked polarization,

caused by the CAFTA, led the government to pursue a referendum, Costa Rica’s first in its

history, preventing that mobilizations may reject the agreement (Sanchez et al., 2010).97

Not without struggles and a huge influential media campaign, the CAFTA was finally approved

in October 2007. Analysts of the process considered that the CAFTA’s demonstrations, similar

to the ICE Combo, were “in defense of the public, and against private acquisition”.98

Sanchez et

al. (2010) states that CAFTA got into the social fabric of the Costa Rican society and prompted

old conflictual processes over land tenure, expansion of agricultural frontiers, and threats to the

protection of nature.

The same year of the CAFTA referendum, Costa Rica launched the initiative of carbon

neutrality by the year 2021. The initiative was presented during the Bali United Nations Climate

Change Conference in December 2007. Together with the “Peace with Nature Initiative”, it was

announced by the presidency, aiming at “strengthening political actions and commitments to

96 “Pacífica marcha contra TLC” La Nación, 24.10.2006. “Marcha contra el TLC evidenció aislamiento

del gobierno”, Siempre Verde, 28.02.2007. “Majestuosa manifestación contra el TLC” ANEP,

27.02.2007. 97

Total participation in the referendum reached 60% of people of voting age, from which 51.62% voted

in favor and 48.38% against. 98 “Referéndum sobre el TLC potenció la participación ciudadana” Noticias UCR, 10.10.2012.

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reverse the alarming trends of human impacts over ecosystems at global, national and local

levels” (MREC, 2008, p.12).

The ‘peace with nature’ initiative was promoted, on the global forum, together with “The Costa

Rican Consensus”, a proposal to include ethical criteria in public expenditure in accordance

with the Millennium Development Goals (MREC, 2008). The proposal’s goal was to introduce

changes within the frameworks of development aid, credit and debt relief of donor countries and

international financial organizations. On October 2007, both initiatives derived in a pioneer

exchange of Debt for Nature Swap of US 26 million dollars with the United States (MREC,

2008).

On a national level, carbon neutrality was defined primarily as a commitment to offset, reduce

and avoid carbon emissions domestically, generated as part of the country’s intention of

aspiring to become the first carbon neutral economy of the world.99

Therefore, it is composed

by both national and international agendas, the first with a focus on mitigation and adaptation,

the second aiming to have incidence and attract foreign resources (IMN, 2009). In the route

towards carbon neutrality, the Costa Rican Ministry of Environment declared the need to

diversify the energy mix, “since a large part is still generated by hydroelectricity and fossil

fuels” (MINAET, 2009, p. 62).100

However, few changes were implemented, within a carbon

neutrality plan, by means of a national sustainable energy strategy. This is applicable to the

transport sector, by far the largest emitter of GHG, and the electricity generation field.101

Chief actions were directed to the economic internalization of CO2 emission costs within the

fossil fuels prices and tax incentives on hybrid or electric vehicles (IMN, 2009; MINAET,

2009), as well as to electricity. This was reflected in the energy goals defined in the National

Development Plan 2006-2010, as well as in the National Strategy for Climate Change. They

stated objectives: “To improve technologically and restore reliability levels, quality and security

in energy supply, thus reducing the use of fossil fuels in electricity production to become by the

year 2021 the first nation that produces 100% of its electricity consumption from renewable

energy sources” (MIDEPLAN, 2007, p.81).

According to this carbon neutrality approach, hydroelectricity became the easiest path to

achieve the goal. The ICE 2010-2021expansion plan proposed a series of seven major new dams

99 Programa País. (2012, May, 22). Retrieved April, 2014, from

http://cambioclimaticocr.com/index.php/2012-05-22-19-47-24/programas/programa-pais 100 However, among alternative sources, only a short reference to biofuels, especially for the transport

industry, is included. 101 The main initiatives in the transport sector, namely the electric train and the introduction of biofuels in

the transport sector, remained at a proposal level (IMN, 2009).

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with a total generating potential of 1440 MW (Carls & Haffar, 2010). At least three of them

have already been initiated (e.g. the Reventazón, the Savegre and the Diquís HPs).

The country’s conservation patterns have encountered, up to a certain point, those of production

and market orientation by discourses of carbon neutrality. Costa Rica will be able to sustain

economic growth and consumption patterns while remaining low carbon, as long as the forest

coverage can off-set an important amount of CO2 emissions and large hydroelectric projects can

provide electricity, minimizing oil imports. Nevertheless, these advantages in approaching

climate change cannot disregard other social, cultural, and environmental relationships that

became increasingly unstable.

In spite of suitable economic growth rates, this model has been unable to reduce poverty and has

increased inequality indicators. Since 1994, the incidence of poverty and extreme poverty

remained around 20% and 6% respectively, while inequality has been growing.102

The high

levels of human development and declining poverty that followed active and sustained policies

for social inclusion since the 1940s, started to deteriorate (PEN, 2012).

Simultaneously, a widespread disenchantment with politics and politicians had repercussions at

a political level. According to the system’s support index, measured by the Latin American

Public Opinion Project (LAPOP), the lowest levels were reached in 2002 and again in 2012. All

in all, these processes resonated broader social and political demands for more citizen

participation in the decision-making apparatus. This aspect marks a new phase for the

electricity sector, a claim that transcends the public or private character of the activity.

As an expression of those social demands, a new political actor emerged giving birth to the

Citizens’ Action Party (Partido de Acción Ciudadana; PAC), a center-left fragment of the PLN,

founded in December 2000. In 2014, the PAC candidate, Luis Guillermo Solís Rivera, was

elected President of Costa Rica, breaking off 66 years of bipartisanship. Part of the purposes and

principles expected from this administration were the decrease in poverty and social inequality

levels, together with a platform based on encouraging citizen participation and involvement in

public affairs.

In summary, although in the transition from a ‘green republic’ to a ‘carbon neutral nation’, the

country’s growth model shifted from natural-resource intensive to non-traditional exports,

structural conditions, such as poverty and inequality remained unchanged. Moreover, the

political disenchantment also manifested itself in the electricity scene with a number of protests

and demands for political participation. At this juncture, hydroelectricity was associated to

102 Those poverty indicators are similar for urban and rural areas suggesting an absence of regional

exclusion; nevertheless, inequality is still highest in rural zones (PEN, 2012).

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insecure livelihoods, unequal access to water resources and lack of participation in decision-

making, which caused conflicts with local communities. Those developments are further

analyzed in the next chapters.


Technological and institutional developments towards carbon neutrality, by the year 2021, are

interlinked. The origins of the technological path, based on the continuation and expansion of

hydroelectricity projects, coincide with the foundation of the country as a “green republic”, a

category that distinguished the national growth model until today. From the study of past

events, three observation periods were distinguished.

A first period, before 1990, was initiated by a critical juncture in the national electricity sector

with the creation of the ICE (1949), which occurred during the welfare state era. During this

time, electrification was expanded in the country and the hydroelectricity model base was

consolidated, mainly through the development of state dams and RORs, by the hand of state

actors, in particular the ICE. Fossil-fueled plants were incorporated to the national network right

from the beginning, as peak demand and back-up plants. At the end of this period, solar energy

was at an experimental stage, geothermal stations were under exploration, and preliminary

studies of wind parks were conducted.

A second time period is bracketing transformations during the 1990s, preceded by the Law to

promote private electricity generation and subsequent reforms (1995). This timespan

experienced the diversification of energy sources, as well as the incorporation of new actors due

to liberalization reforms in the sector, particularly the participation of private energy producers.

These reforms also produced tensions between actor constellations with repercussions in future

developments.

A third time period identifies more recent developments, following climate change

commitments and the country’s carbon neutrality initiative (2007) to be achieved in 2021.

Although technology research in the energy sector began in previous decades, the first

electricity projects went on line until the mid-1990s. In the year 2010, the proportions of total

electricity generation were distributed among hydroelectricity (70%), alternative renewable

sources (15%) and fossil fuel sources (15%).

Most production, from alternative renewable sources, came from the ICE geothermal stations

(12%) that had an expansionary phase during the 1990-2000 period. Private wind parks, with a

lower contribution (4%), were continuously pressed forward, during this phase, similar to

biomass stations (1%). While the share of fossil-fueled electricity generating installations grew

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steadily during the last decade, alternative renewable sources remained stagnant. In terms of

state–society relations, each period triggered new arrangements between actors in the electricity

sector, but also latent conflictual processes placed in terms of relations between state, private

actors and community-based organizations.

The next four chapters go into detail on the self-reinforcing mechanisms causing status, as well

as those drivers of change, in the national energy system. Their purpose is to explain decision-

making in the energy sector of Costa Rica. In the following chapters, the drivers of decisions are

separated according to efficiency mechanisms, political power mechanisms and legitimation

mechanisms.

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Table 7. Characteristics of existent plants over 1 MW and total installed capacity by

Energy source and year of operation.

Source: Plan de Expansión de la Generación Eléctrica 2014-2035 (ICE, 2014).

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6 Efficiency Mechanisms in the National Electricity System

6.1 Introduction

The present chapter traces the choices between energy projects and technologies following the

logics of efficiency. Decision-making, through efficiency mechanisms, is separated into two

levels: individual and systemic. In the case of individual accounts, actors’ decisions are based

on rational cost-benefit assessments (i.e. calculus approach). They, either follow profit

motivations (private actors) or effectiveness to achieve goals at the minimum cost (public

actors). Accordingly, three drivers of efficiency were identified at this level: a) coordination

effects, b) learning effects and c) scale economies.

Regarding systemic accounts of efficiency, actors’ choices also comprise cost-benefit logics, but

the optimization concerns the energy system as a whole, not only individual projects. Moreover,

the mechanisms, at the systemic level, are beyond individual viewpoints in the sense that they

refer to survival or adaptation of the overall energy system. Three drivers of efficiency were

identified at the systemic level: d) global climate change effects, e) reliable electricity effects

and f) national welfare effects.

Figure 7. Efficiency mechanisms and drivers


The following sections explain how efficiency drivers operate over time. After the introduction,

Section 6.2 briefly presents the actors involved in the framework’s efficiency. Section 6.3

elaborates on drivers from individual accounts, followed by Section 6.4 with explanations from

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the systemic accounts. The chapter ends with Section 6.5, which includes some preliminary

conclusions.

6.2 Actors Involved and their Interests in the Decision-Making Processes

Since its origins and during the ‘developmental state era’, the Costa Rican Electricity Institute

(ICE) developed characteristics of a natural monopoly in terms of electricity production.

Hydroelectric dams provided the infrastructure to achieve the state’s goals of electricity supply

for the domestic industry and to expand grid connections (Vargas, 2002). During this period, the

ICE’s employees gained technological expertise and efficiency in building hydroelectric

installations.

After liberalization reforms, the incorporation of private investors gave way to the development

of several run-of- the river (RORs) hydroelectric plants. Private electricity generating

installations were limited, in scale, according to the Law. In this period, the first wind energy,

and geothermal stations came on line, though, to a limited extent. In both cases, advances in

technology were supported in the earlier stages by the ICE and by the international partners who

provided technology transfer.

The subsequent legislation created the regulatory body (i.e. the Regulatory Authority for Public

Services, ARESEP), whose responsibility was that of establishing the electricity tariff, at all

stages (i.e. generation, transmission, distribution, and commercialization), with a more technical

(efficient) approach.

The new legislation also enforced mandatory Environmental Impacts Assessment studies (EIAs)

to every productive activity, including electricity projects, a task that was assigned to the

National Technical Secretariat Office of the Environment (SETENA) ascribed to the Ministry of

Environment.

At the same time, the ICE continued developing large dams sustained by national economic

growth goals, but also to further expand electricity sales. The ratification of the Central

American Electric Market protocol provided incentives to fulfill a regional demand for large

quantities of electricity at a low cost. Hydroelectric dam characteristics were also suited for this

purpose.

Simultaneously, Costa Rica was the first country to join industrialized nations to offset

greenhouse gas (GHG) emissions (Landreau, 2006). The country was also a pioneer in the

development of the Payments for Ecosystem Services (PES) selling emission reductions through

the Certifiable Tradable Offset (CTO) instrument according to the Kyoto Protocol. The creation

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of a global carbon market became attractive for private and state actors, at a national and

international level, to follow the very same institution in its carbon emission reduction efforts.

Moreover, global climate change and national energy security challenges concerning oil

dependency facilitated the communication channels between governments, corporations from

industrialized countries, electricity investors at a national level and non-governmental

organizations (Interview 4H, 2013).

In this period, the ICE and the rural electricity cooperatives (e.g. Coopeguanacaste) launched

the Rural Electrification Program (from now on referred to as REP) that used solar home

systems (SHS) to provide electricity for the remaining population without electricity, to reduce

dependence on firewood and other oil fuel sources, as well as to target CO2 emissions

reductions. The REP is supported by partners from the international cooperation (e.g.

implemented by the United Nations Development Program and financed by the Global

Environmental Fund).

The first Costa Rican Association of Solar Energy was created in the 1990s as part of the

initiative of public university researcher, Shyam S. Nandwani, to become part of the Costa

Rican Section of the International Solar Energy Society (ISES) (Böer, 2005). After ten years of

being active and nearly 120 members, the Association was dissolved in 2006 (Interview 3N,

2013). In 2010, solar technology advocacy groups organized themselves again in a new

association: “the Costa Rican Solar Energy Association” (ACESOLAR), a non-profit private

organization promoting the use and development of solar energy in Costa Rica.

The Association is made up by members of national universities, the industry chamber (i.e.

CICR), small business in the solar energy market, and the German International Cooperation

Agency. (i.e. GIZ), who works alongside national regulatory bodies (e.g. ARESEP; SETENA;

INTECO). Among other activities, ACESOLAR supports research on technology cost,

efficiency, and reliability issues.

In the same year, the ICE launched the Net Metering Pilot Project (Plan Piloto de Generación

Distribuida para Autoconsumo) or distributed electricity generation (DEG), another project,

besides the Rural Electricity Program, using alternative renewable sources at smaller scales.

However, the DEG was not providing solar home systems, at subsidized rates, to users in

isolated areas; instead, it was promoting their self- consumption use to clients already connected

to the grid. By 2012, the first solar energy park, in Costa Rica, reaching 1MW of installed

capacity started operations (i.e. the Miravalles Solar Park). It was developed by the ICE and

financed through the Japanese government’s donations, conceived as a demonstrative project

providing electricity to the grid (Interview 3J, 2013).

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In 2014, two main actors are considered key players in the efficiency framework: decision-

makers at an individual projects level (i.e. state and private investors) and regulatory actors at

the systemic level (i.e. the Energy Planning Sector; ARESEP; SETENA). Among secondary

actors and institutional entrepreneurs are mainly private associations, the influence of

international organizations, and the global industry. Their actions affect decisions in terms of

cost-benefit assessments.

6.3 Individual Accounts and Efficiency Mechanisms

6.3.1 Drivers of Coordination Effects

According to the rationale of coordination effects, they are producing efficiency gains from

rule-guided behavior that can be anticipated, making them attractive for others to adopt and

follow the very same institution (e.g. targets, limits, standards). Since the 1950s, different actors

adopted and applied laws and norms to develop the country’s national energy resources with a

national welfare goal. To the private sector and the future institutional orientation of the energy

system, liberalization reforms increased private competencies and prompted side-effects on

energy decisions through new laws and regulations.

Subsequent to liberalization reforms, coordination effects altered individual accounts for

electricity production through three rule-guided norms that can be clustered into market

regulation, environmental impact assessments, and carbon mitigation incentives. These norms

came into effect more or less simultaneously and began shifting energy decisions after the

1990s. Evidence of these effects provides possible justifications for the reinforcement of

hydroelectric projects, as well as for advances in wind parks, and initial steps in solar energy at

larger scales.

New laws regarding liberalization of the electricity sector in the country authorized the ICE to

buy electricity from private companies “whose primary energy sources are hydropower,

geothermal, wind or another non-conventional renewable source” (Law 7200).103

However,

during this decade private hydroelectric installations continued growing faster than other

alternative renewable energy projects. Nearly 27 hydroelectric plants of small and medium

capacities were built under co-generation Laws 7200 (1990) and 7508 (1995) (Cartagena, 2010)

versus three private wind parks, built between 1990 and 2000.

In terms of market orientation, the new approach of electrical regulation was assumed by the

Regulatory Authority for Public Services (ARESEP). According to the methodology initially

103 In this Law, a non-conventional renewable source includes sources that use any basic element, except

fossil fuels, mineral carbon or water for energy production (Law 7200, Art.4).

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established by the ARESEP, the cost of private generation should be lower to that of the ICE

(i.e. principle of avoided cost). However, this approach is limited in providing incentives for

improving efficiency and reducing costs (Dixit et al., 2014).

In addition to market regulations that stimulated hydroelectric projects, another group of norms

started to deal with the environmental impacts of these projects. Formal regulations, on

Environmental Impacts Assessment studies, were initiated in 1995 with the creation of the

National Technical Secretariat Office of the Environment (SETENA). Moreover, state and

private developers started to adjust their behavior to this norm through informal channels of

diffusion as well.

Environmental regulations were also in line with the growing importance of Corporate Social

Responsibility (CSR) that emerged as a form of corporate self-regulation to deal with

environmental impacts and legitimacy problems. According to previous studies, since the

1990s, Costa Rica experienced a second phase of CSR strategies, by the hand of multinationals

that included CSR within their corporate policies (Empresarial, RIDRS, 2005).104

This was also

confirmed during interviews at the ICE.

The ICE’s planning department managers refer to internal processes of reengineering taking

place, in the 1990s, that gave birth to the systematic incorporation of the socio-environmental

variable (Interview 4L, 2013). As a result, the ICE created the Environmental Planning

department and special attention was given to new methodologies of environmental impact

assessment at projects’ initial stages. Since then, these issues gained relevance in the Institute’s

agenda.

While private and state investors directed their attention to projects’ local effects, another group

of instruments started to gain relevance in attention to impacts, at a global scale, from reducing

carbon dioxide (CO2) emissions. In the 1990s, the Costa Rican government and the Ministry of

Environment became active partaking in joint implementation strategies (JI) and clean

development mechanisms (CDM). Furthermore, the country also developed similar instruments,

at the national level, in the 1990s, through the Payments for Ecosystem Services (PES) and in

the late 2000s, in the promotion of carbon neutrality by 2021.

Carbon mitigation incentives created a rule-guided behavior that encouraged decisions on

renewable energy sources, applicable to private and state investors. Two considerations, from a

calculus approach, help to explain their adoption from national actors’ perspective. First, the

innovative mechanism of a global carbon market coincided with the oil price shock, in the early

104 The first phase was during the 1930s when foreign companies invested in infrastructure in isolated

areas. (Empresarial, RIDRS, 2005).

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1990s, and the oil price speculation again in the late 1990s, which increased oil prices and

attracted interest on alternative renewable sources worldwide. Second, global climate change

and national security concerns facilitated communication channels between governments,

corporations from industrialized countries, electricity investors at the national level, and non-

governmental organizations (Interview 4H, 2013).

The first consideration points out to individual accounts and profit motivations in decisions

towards alternative renewable sources. The second refers to more systemic accounts discussed

in the next sections. At any rate, all three private wind projects that went online in this period

became part of the JI strategies issued by the UNFCCC.105

Similarly, during the 2000s decade, all private wind and biomass projects, as well as the ICE

wind park were registered at OCIC (Landreau, 2006). Project reports from these initiatives

remarked the displacement of fossil fuel electricity units and the subsequent reduction of CO2

emissions. However, the number of projects implemented jointly in Costa Rica was relatively

small (i.e. around 10), and most of them were on forest conservation, rather than renewable

energy projects.

Likewise, the national environmental strategy of the PES had focused on the conservation of

watersheds and natural areas for carbon mitigation goals (i.e. offset carbon emissions at a global

level). Over the years, the number of projects at the OCIC did not increase much (i.e. around 17

in 2015). Nevertheless, carbon mitigation incentives applied to all wind projects built in the

country, in the 1990s, and most of the new ones, as well as to biomass energy projects (OCIC,

2015).

Nonetheless, the question remains why private and state developers choose wind or biomass

energy projects, instead of opting for solar energy or other alternatives. Asked about this

inquiry, non –governmental organization and international cooperation partners in Costa Rica

and Central America indicated that their focus was on the promotion of a range of ‘commercial’

energy sources.106

According to them, their role was as facilitators doing local capacity building

and taking advantage of “non-oil, domestic, indigenous, and commercial energy sources”

(Interview 4H, 2013).

105 Wind parks were the Plantas Eólicas S.A Wind Facility; the Tierras Morenas Wind Park Project and

the Aeroenergía S.A. Wind Facility, financed partly by investors and international cooperation, such as

the US International Development Agency. 106 The term ‘commercial’ energy sources is based on the nature of their transaction in the market, it

excludes energy sources like firewood, biomass and animal dung. (Clasificacion of Energy Sources.

(n.a.). Retrieved April, 01, 2014, from

http://www.ces.iisc.ernet.in/energy/paper/alternative/classification.html)

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Further, responses from private and state investors reported that wind energy was, at that time,

already an established technology and its selection was also motivated by the opportunity

presented from international players in the wind industry (Interview 5D; Interview 1A;

Interview 1P; Interview 1G, 2013). As pointed out by a project manager, at the time, “wind

resources were not only abundant, but the technology also had the support of international

partners” (Interview 5D, 2013).

Solar energy systems (i.e. thermal and off-grid photovoltaic applications) were sold on the

national market, by few small private businesses, since the late 1990s. However, the systems

were at micro, and much smaller scales as compared to projects included in the JI and CDM

schemes with installed capacities of over 3.4 MW.107

In the interviews carried out, solar energy

entrepreneurs repeatedly referred their interest in benefiting carbon mitigation instruments, but

the lack of information and cost were considered the main barriers (Interview 5N, 2013).

According to the ICE’s solar energy project managers, given the size of solar installations it is

not worth applying for CDM mechanisms (Interview 1Q, 2013). Therefore, solar energy

remained outside the scope of the carbon mitigation rule-guided system. In addition, as late as

2010, employees in charge of those solar energy projects, within the ICE, refer to the need for

technology research before further steps in larger applications. However, the situation started to

change in the same year, given the interest from international partners of the solar energy

industry (Interview 1Q; Interview 5H, 2013).

The first solar energy park, at a larger scale (i.e. the Miravalles Solar Park, 1MW) began

operations in 2012, chiefly due to the interest of foreign partners. This park was designed as a

demonstrative project donated by the Japanese government. For the government of Japan, the

project was not only an opportunity to introduce solar electricity, as a clean energy option for

Costa Rica, but also to promote Japanese technology and employment (Interview 3J, 2013).

Further steps on solar technology at larger scales have been cautiously taken. From the

electricity producers’ standpoint (i.e. state and private investors and electricity distributors), this

precautionary position is not completely misguided due a regulatory framework that is still at its

initial steps. In interviews with private investors and academia respondents, they refer to some

“gray areas” of solar technology that still need to be clarified. They include the need for basic

research at larger scales and other ambiguities in terms of socio-environmental impacts

(Interview 3L; Interview 1A; Interview 1P; Interview 2C; Interview 2H, 2013).

107 ICE. (2007, June). Energía solar. Retrieved from

http://www.grupoice.com/esp/cencon/gral/energ/info/nuevas_fuentes.htm

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A stable and predictable regulatory framework is crucial for the effective operation of any

business (i.e. coordination effects). This is acknowledged by several players in the electricity

market who initiated actions in this direction. They include the government, the regulatory

authority, state and private investors and technology advocacy groups.

In the past few years, the promotion of alternative renewable sources, clearly evidenced in the

case of solar energy, is taking advantage of the same rule-guided norms created in the 1990s.

During interviews with ARESEP officials in 2013, they pointed out that, currently, the

regulatory authority is working on a new tariff methodology for solar energy electricity plants.

Similarly, they are working with SETENA to develop specific criteria for environmental impact

assessments that includes specific aspects of solar energy installations. Until now, the Office has

been using the methodology for hydroelectric projects (Interview 2F; Interview 3F, 2013;

Interview 2I; Interview 4B, 2013).

In this process, advocacy groups, such as ACESOLAR, became relevant actors in making solar

energy visible and reaching massive commercialization. According to market regulation norms,

the organization started working together with the Costa Rican Technical Standards Institute

(INTECO) for the harmonization of solar components in the national market. In the same

manner, it worked with ARESEP in the new tariff methodology and with SETENA to develop

specific criteria for the environmental impact assessment of solar projects (Interview 2I;

Interview 4B, 2013).

In addition, ACESOLAR has supported technical studies regarding solar energy application in

Costa Rica, as well as providing answers to main barriers ascribed to the technology. They

include issues such as high cost, low efficiency, high variability, low load factor and lack of

storage system. These are the industry’s areas of major concerns. However, from ACESOLAR

and other solar energy advocators’ perspective, some of these concerns are considered “the

myths of solar energy” limiting further progress on the domestic market (Interview 2I; Interview

4B, 2013). The term was used by ACESOLAR members, who refer to studies that indeed

suggest that the technology is competitive and efficient in the country (Interview 2I, 2013). 108

In the same direction, the government brought support to the ICE’s new Net Metering Pilot Plan

or distributed electricity generation (DEG). ICE project developers remark that the

implementation of the DEG plan has not only been positive from the perspective of users’

acceptance (one of their indicators), but also because solar energy is leading among the

implemented technologies (Interview 2A, 2013).109

Although, this plan is not yet defined nor

108 Results of this study are further discussed in Chapter 9. 109 From total installations, 95% have been for solar systems (107), the rest are combining solar and wind

power applications (2), solar and hydro (1), wind (1), biomass (1) and hydro (1). By consumption sector,

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regulated within the national legislation, it has been linked to new policy instruments that make

reference to solar energy targets by 2020 (e.g. MINAE Directive 14-2011; VI National Energy

Plan 2012-2030) (Interview 4G, 2013).110

After launching the carbon neutrality initiative in 2008, the Ministry of Environment followed a

similar approach for the JI, CDM and PES incentives, largely based on carbon sequestration

through reforestation and forest conservation practices. In 2012, the Ministry included a new

strategy with the formalization of the “Carbon Neutrality Country Program for Costa Rica” (i.e.

Program País Carbono Neutralidad) (Acuerdo -36-2012 – MINAET). The program targets

energy users, mainly local companies, which could compensate their carbon emissions by

means of alternative renewable energies (e.g. co-generation, wind energy, solar energy). As part

of the program, the Ministry created a carbon neutral certification system awarded to those who

comply with the established standards.111

In the period under review, individual accounts of energy decisions were triggered by

coordination effects of ruled-guided behavior from market regulations (e.g. standards, tariffs),

environmental impact assessments and carbon mitigation incentives. All of these instruments

reinforced hydroelectric projects, especially the RORs. In this sense, environmental impact

assessments similar to carbon mitigation and the PES program were also a useful instrument for

investors to gain recognition in the national or global market.

In the case of carbon mitigation instruments (e.g. CDM), it is possible that initially similar

reactions to the new incentive did not anticipate further commitments with alternative renewable

energy, in the country, explaining the reduced number of projects. This also concurs with

Landreau’s (2006) observation, which referred to the fact that the reduced number of projects

registered before the OCIC is largely explained by a national energy system predominantly

based on low carbon energy sources such as hydroelectricity. However, in the case of wind

energy, the carbon mitigation instrument has played a role as an incentive to opt for this

technology and develop wind parks together with foreign partners.

Following this argument, private and state developers choose wind energy or biomass projects,

instead of solar energy, because the latter lacks the aforementioned coordination effects (i.e.

market regulation, environmental impact assessments and carbon mitigation incentives). The

same also applies to other efficiency drivers, at individual level (i.e. learning effects and scale

most of the systems are for residential consumption (83%), followed by general (14%) and industrial

(3%). 110 The VI National Energy Plan 2012-2030 included the specific goal “to equip 10% of households with

distributed generation from solar energy by 2020” (DSE, 2011). 111 This is the INTE 12-01-06 (“Sistema de gestión para demostrar la carbono neutralidad”), the single

norm recognized by the government to demonstrate carbon neutrality.

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economies). Interests on larger scale solar applications were just recently triggered by global

industry developments.

More recently, the ACESOLAR, ARESEP, SETENA’s efforts, among other regulatory

agencies, to incorporate specific criteria for alternative renewable sources, in particular, solar

energy, illustrate the relevance of rule-guided behavior. Their actions began to have initial

escalating effects, including solar energy targets, energy policies and plans in 2011. The same

drivers operate at the ICE’s DEG and in the carbon neutral certification system.

6.3.2 Drivers of Learning Effects

As a result of learning effects, efficiency is gained when executing subsequent iterations (e.g.

with skillful gains increasing returns). Therefore, time is a necessary condition to develop these

effects. Throughout the history of hydroelectricity in the country (i.e. first plant built in the

1880s) and under state control of the Costa Rican Electricity Institute (ICE) for more than half a

century, skillful applications and expertise on the technology were successfully brought about.

ICE technicians developed skills at building hydroelectric plants. Over time, expertise on these

constructions not only grew in terms of knowledge and talent, but also in terms of the size and

scale of the installations. From 1950 to 1989, the ICE built five of the seven major hydroelectric

dams of the country, besides several hydroelectric projects at lower levels.

Learning effects were not the only drivers of energy decisions for state investors. In fact,

liberalization reforms gave way to several smaller run-of-the river (ROR) hydroelectric plants

built by private investors. The influence of learning effects, from private investors’ standpoint,

was also relevant.

Interviews conducted with private investors who started businesses in the electricity sector

during the 1990s confirm this. The private companies were created by former engineers at the

ICE, or had previous experience as construction contractors in the development of hydroelectric

projects, at earlier stages (Interview 5D; Interview 5M, 2013). As pointed out by one

interviewee: “the opening of the sector, through Laws 7200 and 7508, provided a business

opportunity for those who had gained knowledge and skills through their experience with the

ICE” (Interview 5M, 2013).

In comparison, further evidence suggests that similar effects resulted in the emergence of

geothermal stations and wind parks by state and private investors, respectively. Though, these

developments appeared recently, and their expansion was limited from the onset, which

somehow reduced efficiency gains at this early stage. The first geothermal station, developed by

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the ICE (i.e. the Boca de Pozo I, 5MW), was inaugurated in 1994. While the first wind park,

(i.e. the Tilarán, 20MW) was built by private investors in 1995.

In previous decades, research on the technologies was conducted by the ICE with the support of

international partners, who played an important role for technology transfer (e.g. research

institutes, consultants). This is illustrated in the case of geothermal installations. After the first

station had come online, in spite of the high cost of installations, the ICE developed five more

geothermal plants between 1990 and 2009. As pointed out by project developers:

“Geothermal energy continues to gain relevance over the years. While local expertise

has been created, technology was acquired by the ICE (not rented), and proprietary

innovations were incorporated (Interview 4C, 2013).”

Besides, Costa Rican engineers were also trained abroad and became head of project

departments at the ICE (Interview 4C, 2013). Furthermore, the Institute was the only developer

authorized by Law. Hence, the ICE’s engineers developed knowledge and skillful operations of

geothermal stations. According to IEA data, Costa Rica is among the top ten geothermal

producers in the world (IEA, 2010).112

In 2011, a new ICE geothermal station came on line (i.e.

Pailas, 36 MW). Statements from project developers indicated that thanks to the expertise

gained by the state company through the years:

“[…] We have installed, together with the one we inaugurated today, six geothermal

plants which have been working efficiently. We have acquired machinery, equipment

and high technology tools. We have innovated new technologies some unique in the

world […]. Thanks to the talent, innovation and dedication of our people […].”

(Mayorga, 2013, p. 9).

A private company operates the geothermal plant “Pailas” through a BOT arrangement.

According to private investor’s statements, together with the ICE they were providing

investments to speed up the advancement of electricity projects (Stauffer & Long, 2013).

However, geothermal energy potential is also limited by sites with higher potential, which are

located in the volcanic areas and under some category of natural conservation (ICE, 2014).

Conversely, in the case of wind parks, private installations, and state developments later on,

were triggered by the interest of international players from the global energy industry.

Nevertheless, private wind investors also benefited from the ICE’s previous knowledge of the

112 Most of Latin American geothermal potential is concentrated in Central America, Mexico, and Chile

(Tissot, 2012).

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availability of the wind resource, acquired through technical studies conducted at earlier stages.

Though, foreign partners prompted decisions to materialize the projects.

As pointed out by interviewees, even though the ICE was experimenting with wind technology

for decades, the decision also followed the logic of interaction with “a ‘global demand’ of wind

energy that changes specific preferences” (Interview 5D; Interview 1A, Interview 1P, 2013).

After the first wind park (i.e. Pesa, 20 MW, 1995), private investors built three more wind

plants, including another BOT project, by incorporating foreign shares. Similarly, in 2002, the

ICE’s first wind park (i.e. Tejona, 20 MW) was a joint venture with international players

(Interview 5D, 2013).

The evidence presented above reveals that learning effects are possible explanations for the

reinforcement of hydroelectric installations, state and private, as well as for the development of

geothermal stations. These effects, not only strengthened their continuation over time, but also

encouraged the introduction of innovations with domestic expertise. The observed difference

between geothermal stations and wind parks suggests that these effects were not yet applicable

to wind installations or solar energy.

Even though the ICE was experimenting with wind technology for decades and created a basis

for potential learning effects; the first state-owned wind park was connected to the grid much

later than private installations. The same applies to solar energy applications, which remained

relatively small scale and at the level of pilot projects. The lack of partners, at the industry level,

helps to explain this result (i.e. learning effects).

6.3.3 Drivers of Scale Economies

Drivers of scale economies refer to efficiencies wrought by volume (i.e. provide large quantities

at low cost). Those drivers were intrinsically integrated with the ICE’s reasoning when making

choices about energy options, since earlier stages. Based on a calculus approach and aided by

benefits of scale economies from electricity production dams, the ICE developed characteristics

of a natural monopoly. From this perspective, dams provided large quantities of electricity, at a

reasonably cheap prices, compared with many other forms of energy.

The characteristics of dams matched very well with the social orientation of electricity pricing

and grid development that predominated during the 1950s until the 1980s. Their relevance

continued in the following decades, not only for grid development but to sustain economic

growth and further expand electricity sales. The government’s goals and the actions taken by the

ICE, during the 1990s, confirm this.

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For example, in the year 2000, after finishing one of the largest dams of the decade (i.e. the

Angostura HP, 180 MW), the ICE revived efforts to develop the next largest dam known as

“The Great Boruca” (i.e. 1500 MW). Planning officials, at the ICE, during this period stated that

according to their plans, the Boruca HP would follow, foreseen to be in operations in 2010.113

According to Sacchi (2002) and Carls & Haffar (2010), at that time, project managers presented

the Boruca HP as a key project for the country’s growing electricity demand and to supply

energy to neighboring countries.

There were contradictory statements in this regard. The authors found out that, in other

statements, the ICE’s officials affirmed that the dam production would be used only towards

satisfying the national electricity demand. However, the Boruca dam would significantly

increase the national energy generation capacity by nearly 50% (Sacchi, 2002; Carls & Haffar,

2010), the surplus could be sold in the Central American region. Similar inconsistencies were

detected during interviews with the Energy Planning Sector, in 2013, concerning the Diquís HP

(i.e. 650 MW).

Nevertheless, when the government ratified the Central American Electric Market, in 1998 (i.e.

Law 7848), the dams’ advantages became apparent. Firstly, hydroelectricity is a clean energy

source; secondly, the benefits of scale economies, from hydroelectric dams, increase the

country’s competitiveness in the region. As indicated by the policy think tank “Programa Estado

de la Nación”:

“(Tariffs) differences are explained by issues such as Costa Rica’s lower tariffs because

its electricity generation mostly comes from renewable sources, mainly hydroelectricity,

different to other countries that use (fossil-fueled) thermal energy…” (PEN, 2008, p.

54).

According to the market protocol, among electricity players in the country, only the ICE is

allowed to participate in the regional electric market. In the case of private investments, their

incorporation as electricity producers began after liberalization reforms, in the 1990s, but still

limited to the domestic market. The continued opening of the sector promoted by the Central

America-Dominican Republic Free Trade Agreement (CAFTA-DR) increases their interest in

the national and regional market.

On the other side of the coin of hydroelectric projects was the use of solar energy at smaller and

micro-scales within the Rural Electrification Program.114

According to project documents, pre-

113 “La Angostura prende máquinas” La Nacion, 21.07.2000. 114 RORs, geothermal stations and wind projects are in the middle with small and medium size

installations.

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feasibility studies of the Program considered two possible technologies for electrification in

rural areas: SHS and micro hydroelectric stations (GEF, 2005). The choice of using

decentralized renewable energy systems (i.e. SHS or micro-hydro) versus centralized (i.e.

central plant delivering electricity through the grid) had cost-benefit logics (e.g. additional cost

per kW). This was confirmed in interviews stating that “The cost of the grid expansion in areas

with difficult geographical conditions or disperse settlements was higher than the energy

provision with solar home systems” (Interview 1Q, 2013).

In the documents, it was also found that within the projects’ portfolio, comparing micro

hydroelectricity stations and solar energy installations, the latter were more costly (MINAE,

2005; UNDP-GEF, 2011). Moreover, the REP aimed at incorporating micro hydroelectric

stations, hence including “the expertise of private developers and other rural distributors”

(MINAE, 2005, p. 96-99). However, preliminary feasibility studies, in selected areas, showed

that hydropower potential was lower than expected (UNDP-GEF, 2011).

Therefore, in spite of the higher cost of the SHS, the state company chose this technology with

the implications it has for the overall program. As pointed out in project documents: “if the

proportion of hydroelectric projects is significantly lower, the implications, in terms of costs and

quality of the services provided to the consumers, have to be re-evaluated in the program”

(MINAE, 2005, p. 100). In addition, given the poverty reduction objectives, the SHS were

provided to the beneficiaries, at subsidized rates, increasing the cost to project investors.

In part, these difficulties explain the slow progress in the distribution of these systems to the

remaining population without electricity. By the year 2002, 1000 solar energy systems were

installed in rural communities (MINAE, 2005). According to the ICE’s data, 1325 solar systems

were installed in 2006 and by the year 2010 the number of systems reached 1650 (UNDP-GEF,

2011; Interview 1Q, 2010). By the year 2011, the number of households without electricity

remained at 13.533 (i.e. 1.1% of total households) (INEC, 2011).

With the Net Metering Pilot Project or distributed electricity generation (DEG), one of the

purposes is to promote renewable energy sources at small scales. In a next step, the project

seeks to incorporate other state companies and rural electricity providers. However, these

companies have been reticent to get involved in DEG.

In interviews to managers at Coopeguanacaste, a rural electricity cooperative that operates in

Guanacaste province, argued that existent infrastructure is mainly distribution grid supplied by

hydroelectric plants. Therefore, their primary concerns in taking further steps in DEG projects

are mainly due potential adverse effects on their core business: energy distribution.

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Furthermore, since 2010 they are opposed to bill proposals in the legislative that come up to

changes in supply electricity to the segments of ‘great consumers’ (FINE, 2010).

Conversely, the first solar energy park is still small (i.e. Miravalles Solar Park, 1MW). The park

was not designed to compete or complement other electricity plants, neither in terms of size nor

in production. Technicians and operators reaffirmed the following, when assessing the solar

parks against geothermal stations of similar size:

“Comparing geothermal energy and solar energy productivity per hectare, solar energy

generation capacity is far behind, for example in 30 hectares, the solar energy

installation produces 1MW, while one geothermal station in the same area produces 10

MW” (Interview 3J; Interview 2D, 2013).

Nevertheless, state and private investors have expectations to continue developing solar energy

installations at larger scales in the future. The benefits of the pilot solar parks in terms of

electricity production, low maintenance cost, and avoided carbon emissions, are remarked by

project developers (Interview 3J; Interview 5H, 2013). For instance, technicians affirmed that in

spite of the relative lower production (e.g. kW per ha.) “the net energy generation of the plant

surpassed expectations in terms of kWh during most part of the year” (Interview 5H, 2013).

Even though, the issues of scale and other “gray areas” of the solar technology still need to be

clarified. As stated in interviews with project developers and academia, one problem to resolve

in the future development of the solar technology is that basic research is conducted at smaller

scales, though profits are produced at larger scales (Interview 2H; Interview 2C, 2013). Besides,

there are some ambiguities in terms of socio-environmental impacts of the technology

(Interview 3L; Interview 1A; Interview 1P, 2013).

Based on this evidence it seems to be clear that in the case of large dams, drivers of scale

economies are an incentive for the ICE to expand further these projects. In this way, the ICE

could fulfill not only national but also a regional demand with massive quantities of electricity

at low cost. This is different in the case of private investors because although RORs can also

reach larger scales, the possibilities to profit from scale economies were limited by Law.

Moreover, private producers compete in the national small market (when a bid is open), but they

are not allowed to participate in the Central American Electric Market that is exclusive for the

ICE. This restriction of the regional market is expected to change in the near future, and both,

the ICE and private investors are foreseeing competition in the regional market (Interview 1G,

2013).

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Even so, the anticipation of the country’s regional competitive advantage, based on “clean”

hydroelectric sources, might not be applicable in the near future. As pointed out by experts

during the interviews conducted, other countries in the region have accelerated developments,

not only in hydroelectric projects, but mainly in wind and solar energy installations (e.g. in

Nicaragua and Honduras) (Interview 2P, 2013). In the case of solar energy, other efficiency

logics different from scales economies motivated initial energy decisions in the selection of the

technology to achieve electrification, at minimum cost and in isolated areas. Those motivations

can be linked to economies of scope (i.e. efficiencies wrought by variety, not volume).115

Nevertheless, over time, scale economies also became relevant in the proliferation of solar

technology on a global level.116

The lack of commitment to net metering or distributed electricity generation (DEG) is a central

limitation to further advances in the use of the technology. From the statements above, a

possible explanation for this might be that DEG is a limitation to the core business of electricity

distributors that takes advantage of scale economies from the existent distribution infrastructure.

The fact that there is much controversy, on sizeable consumers, stresses the relevance of larger

scales: the profitable segments are those who consume large amounts of cheap electricity. This

also points out to other elements of inertia, created by actors, such as vested interests, fixed

assets and sunk costs (further expounded in the next chapter).

6.4 Systemic Accounts and Efficiency Mechanisms

6.4.1 Drivers of Global Climate Change Effects

Efficiency drivers of global climate change effects are connected to systemic accounts by logics

of resource optimization and economic competitiveness of the energy system. On the one hand,

climate change mitigation strategies help to reduce the use of fossil fuels, avoiding negative

environmental externalities and dependency on oil imports for electricity generation. On the

other hand, having a low carbon energy system also operates as a response strategy to position

the country as a clean energy producer, at a regional and global level.

Accordingly, efficiency drivers of global climate change effects imply that the more a

technology can contribute to the decarburization trend of the energy mix the more it is used with

115 Plan for Economies of Scope. (November 1983). Retrieved January, 2015, from

https://hbr.org/1983/11/plan-for-economies-of-scope 116 This is also evidenced by several references to the Swanson law, on a global manufacturing level,

stating that the cost of photovoltaic cells fell by 20% with each doubling of global manufacturing

capacity. The term was coined by a publication, since 2012, after a solar manufacturer observed this

phenomenon.

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this aims. The more a technology is used with mitigation aims, the more it gains efficiency

reducing carbon emissions, and therefore, it is reproduced in subsequent decisions.

In 1998, experts at the OCIC considered that renewable energy sources for electricity

production, such as hydroelectric and geothermal stations, consumed more initial capital than

fossil-fueled plants (Manso, 1998). However, they also added that, in the long run, the

renewable options are more profitable, especially if the environmental costs of negative

externalities of fossil fuels are incorporated within the cost. The environmental externalities

included air pollution and climate change, which according to experts, overall, produce

“environmental, economic and social impacts that would be catastrophic to human kind”

(Manso, 1998, p. 10).

Therefore, having a national energy system predominantly based on low carbon energy sources,

mainly from hydroelectricity, provides a competitive advantage to the country. As indicated, in

2008, by the policy think tank “Programa Estado de la Nación”, hydroelectricity provides a

competitive advantage to national developers as a clean energy source, in contrast to a regional

energy mix based on fossil fuels (PEN, 2008). This economic advantage is due to scaling

economies at micro level (i.e. see drivers of scale economies).

The same low carbon logic applies to alternative renewable sources. In the case of geothermal

energy, the low carbon characteristic is highlighted in different documents and statements from

the ICE and the Energy Planning Sector. For instance, the Geothermal Resource Department at

the ICE mentioned that over the years geothermal energy started fulfilling other (systemic)

needs as low carbon energy source (Interview 4C; Interview 2D, 2013). Geothermal energy

advantages included “reducing oil dependency and diversify the energy system with clean and

autonomous alternative renewable sources” (Mayorga, 2013).

Similar statements were found in the case of wind energy potential, not only to complement

hydroelectricity, but also to displace part of the fossil-fueled electricity production. Because of

this, wind energy creates “economic and environmental benefits for the country” (ICE, 2013c).

Therefore, efficiency drivers of global climate change effects are also applicable in the case of

wind energy decisions.

On smaller scales, decentralized renewable energy systems such as solar energy also provided

additional services to the overall energy system, besides the provision of energy in isolated

communities without electricity. Since most of these communities depend on fossil fuels and

firewood to satisfy their energy needs, one of the goals of the Rural Electrification Program is

CO2 emissions reduction, estimated by 5700 tons in ten years (MINAE, 2005).

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More recently, global climate change effects started to gain attention from different actors.

According to the Energy Planning Sector and the ICE, limited hydroelectricity production,

during the last dry seasons, increased the use of fossil-fueled plants as a back-up plan. This was

the direct cause of increasing electricity tariffs considering the ARESEP’s established

calculations methodology (Interview 4N, 2013; Interview 2F, 2013).

In this context, the Diquís HP became the center of a renewable energy scenario required to

accomplish the country’s goal of carbon neutrality in 2021 (MINAE, 2010; Interview 4N,

2013). The Ministry of Environment draws attention to the dams’ advantages, since dams have

the capacity to store energy and to produce cheap and large amounts of electricity (MINAE,

2010). In 2013, at the Natural Gas Perspectives in Central America” forum, the Energy Planning

Sector officials presented the Diquís HP as the alternative versus a natural gas scenario towards

carbon neutrality (Interview 4N, 2013; Interview 5E, 2013).

Therefore, this one-sided statement considers dams not only the most effective mitigation

strategy but also the best climate change adaptation strategy. In terms of mitigation, efficiency

drivers of global climate change effects incentivize the use of the most cost-effective alternative

for the CO2 emissions reduction, which are dams. The choice also provides a competitive

advantage by positioning the country as a clean energy producer. In terms of adaptation, dams’

storage capacity is deemed appropriate to adjust to climate variations.

Statements concerning decisions of alternative renewable sources like geothermal fields, wind

and solar energy also refer to the low carbon characteristics of these alternatives. However in

terms of scale of installations, besides hydroelectric plants, only wind energy and geothermal

stations emerged as a potential alternative to displace oil fuel electricity at the national level.

6.4.2 Drivers of National Welfare Effects

According to the literature, economic growth, and social development are primary conditions of

energy systems at national level. These goals make reference to national welfare effects of

electricity production. In line with this, the main objectives of the ICE, since it was created in

1949 were to serve the industrial demand for electricity, increase electrification, social

orientation of electricity pricing and grid development (Law 449).

Although the focus changed over time, the same social orientation remains in the national

energy sector. At earlier stages, the sector had an emphasis on ‘developmentalist’ policies to

exploit own energy sources available and provide electricity to most of the population. Later,

the orientation changed towards ‘sustainable development’ and the dynamic interaction between

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environmental sustainability, social equity and economic efficiency. Here, economic

competitiveness gained a fundamental status.

Based on technical characteristics from scale economies, at the individual level, hydroelectricity

became important for the country’s orientation, since the very beginning, especially

hydroelectric dams. In terms of electricity coverage in 1999, the electrification rate reached 95%

of the population (ICE, 2013b). Therefore, in the following years, the economic competitiveness

goals sustained the prioritization of hydroelectric dams. Cost-benefit logics, from the

perspective of national welfare effects, were present in the emergence of geothermal

explorations in the 1970s, overlapping with the 1970s oil crisis.

After liberalization reforms, arguments of economic competitiveness started to gain relevance in

the national agenda. In 2003, the Energy Planning Sector published the National Energy Plan

2002-2016, framing the national energy policy within a model of ‘Sustainable Development’

(DSE, 2003).117

According to this plan, the main challenges of the sector were social wellbeing,

energy productivity, economic competitiveness and environmental degradation. Therefore, the

energy supply’s strategic objectives were to develop, optimize, and make the best of the

different energy resources, minimizing their vulnerability and environmental impact (DSE,

2003, p. 5).

This optimization logic of energy resources has implications to both conventional and

alternative energy sources. For alternative renewable sources (i.e. geothermal, wind, solar

energy, biomass, biogas) and micro-hydroelectric stations (i.e. up to 10MW) this meant that

their incorporation was cautiously undertaken. The process included an examination of their

characteristics in order “to optimize their financial cost, maximize benefits to electricity users

and minimize inherent risks intrinsic to these technologies” (Guideline 22-2003 MINAE, in

DSE, 2008a, p. 43).

Whereby, for national conventional energy sources (i.e. hydroelectric dams and fossil fuels),

their energy potential inventory has to be updated, and their environmental impacts managed

(DSE, 2008a, p. 43). The concrete objectives are aimed at substituting fossil fuels and

developing electricity generation capacity with alternative renewable sources. The specific

target was to reach 15% in 2010 “as long as they are economically, environmentally and

socially cost effective for the country” (DSE, 2003, p. 9).

In terms of the potential of conventional energy sources, the National Water Policy stated that

“water is the main source of energy within the national electricity portfolio …” and this is “a

117 “Sustainable Development” is defined as “a process that is framed in a tridimensional relationship

between environmental sustainability, social equity and economic efficiency” (DSE: Plan, 2003, p. 1).

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situation that will remain in the future, since water is the largest source of renewable energy”

(MINAE, 2008, p. 14). According to this statement, there is a considerable and untapped

potential in terms of water availability for electricity generation. Similar arguments were linking

competitiveness to hydroelectric projects, on the one hand, and alternative renewable sources

with cautious optimization according to their inherent risks, on the other.

Sustainable development and logics of economic competitiveness became a central principle of

national energy policies in the following years. 118

The National Strategy for Climate Change

2009 and the National Energy Policy 2010 established the goal of minimizing risks of climate

change and maximizing ‘socioeconomic competitiveness’ of different sectors (MINAE, 2009).

The relation to “price competitiveness” is also relevant and it results from “the implementation

of projects under criteria of sustainable development, including social and environmental

aspects” (MINAE, 2010, p. 17).

In this period, the political context also favored those priorities. According to the government,

those changes might also help to cope with price increases caused by oil price fluctuations

“through the diversification of energy sources and a broad participation of public and private

sectors” (MINAE, 2010, p. 35). Hence, the last governments had sent several bill proposals to

reform the sector and increase private participation. Even the National Energy Policy 2010

mentioned those electricity bill proposals as key tools, in the national energy strategy, “to keep

and improve the population’s standard of living and the competitiveness of the productive

sector” (MINAE, 2010, p. 35).

In fact, national welfare effects and economic competitiveness, in particular, were highlighted

by different actors during the interviews in 2013. Respondents from the industry sector and

politicians repeatedly alluded to economic competitiveness as the first challenge of the national

energy system. This was usually linked to the communication of developmental objectives and

poverty reduction (Interview 2M; Interview 4N; Interview 3H, 2013).

Although electricity prices remained relatively competitive, in 2010, they have had an

increasing trend over the last 5 years (MINAE, 2010; DSE, 2011b). According to data from the

Energy Planning Sector, from 2005 to 2010, the average annual price of electricity increased in

all sectors, led by the residential prices that went up from 0.069 US dollars/kWh to 0.135 US

dollars/kWh. Similarly, the industrial sector experienced increases from 0.066 US dollars/kWh

to 0.130 US dollars/kWh (DSE, 2011b, p. 11). The cause was identified in the use of fossil fuels

for electricity generation that climbed from 1.5% to 9% of the total electricity generation

118 Other principles besides competitiveness are conservation and sustainable development, universality,

solidarity, efficiency, innovation, viability (environmental, social and economic), as well as public and

private participation (MINAE, 2010).

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between 2005 and 2008, and remained over 7% in 2010 (DSE, 2011b).119

However, this did not

trigger further engagement with alternative renewable sources.

Conversely, the ICE’s Managing Departments and the Energy Planning Sector use this context

of hiking electricity prices to further advance and prioritize the construction of larger

hydroelectric projects. For instance, the Reventazón HP and the Diquís HP are expected to be

“adding at least 1400 MW of capacity during the next decade” (MINAE, 2010, p. 26-30).

Furthermore, the National Energy Policy 2010 encourages the energy sector to seize

opportunities of the Central American Electric Market Treaty, positioning the country, as a

regional leader, by using the renewable energy potential (MINAE, 2010, p. 27).120

This claim is contradicting with statements extracted from interviews with Energy Planning

Sector officials, who affirmed that supply and demand are always very tight due to high costs of

being over invested (Interview 5E, 2013). Consequently, national energy needs are barely

satisfied and compel the energy sector to take all possible energy sources into consideration,

including natural gas prospects (Interview 5E; Interview 4E, 2013).

Nevertheless, by the year 2010, the target of 15% of electricity generation from alternative

renewable sources established in the National Energy Plan 2002-2016 was reached. The

proportions of total electricity generation were distributed among hydroelectricity (70%),

alternative renewable sources (15%), and mostly geothermal and fossil fuel sources (15%). Yet,

limited advances were conceded to manage the aspect of negative externalities from

conventional projects, especially concerning integrated watershed management.

6.4.3 Drivers of Reliable Electricity Effects

Drivers from reliable electricity effects refer to efficiencies from continuously supplying

electricity to customers. This characteristic is considered critical to promote industrial

development (Bradford, 2006, p. 9), it also helps to keep operation costs low and offers stable,

attractive pricing through long term agreements (Cordaro, 2008). Therefore, reliability is also

related to the calculus approach at individual level following the logics of scale economies.

Similar to these logics, systemic accounts based on drivers of reliable electricity effects provide

arguments for the inertia of large hydroelectric projects.

The Costa Rican electricity system was organized, since the beginning, according to theoretical

predictions. Hydroelectricity is used for based-load electricity, while oil fuel plants are used as a

119 Other factors increasing electricity prices are higher costs of energy infrastructures, including

construction works and social components. 120 Law 7848: Tratado Marco del Mercado Eléctrico de América Central and its protocols under

discussion in the National Assembly.

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back-up and to handle demand spikes. Similarly, experts and engineers at the ICE considered

that, in general terms, the Costa Rican electricity system is a bi-technological system based on

large dams and fossil-fueled plants (Interview 4E; Interview 4N, Interview 3H, 2013).

Historically, these two technologies have been used to secure the Costa Rican energy system’s

reliability.

Hydroelectric dams built in Costa Rica since the 1950s, were equipped with regulation

reservoirs in order to reduce their sensibility to rainfall variability. Parallel, they were also

backup by new fossil-fueled plants connected to the national network during this period.

Meanwhile, larger reservoirs like the one in the lake Arenal built in 1979 with an inter-annual

storage capacity, reduced dependency on periodical climatologically rainfall variability (DSE,

2008a).

Later on, the incorporation of geothermal stations added a new energy source to provide base

load energy demand as a complement to hydroelectricity and to diversify the energy mix.

According to project developers and planning documents, geothermal energy has a base load

characteristic close to hydropower (e.g. DSE, 2003; Mayorga, 2013). In view of the availability

of resources, larger hydroelectric plants and geothermal stations became the sources used to

provide base load energy to the electrical system (Interview 4E; Interview 3H, 2013).

During the 1980 – 1990 period, hydroelectric resource availability for electricity production,

aided by climatic conditions, might also explain the late response of the ICE in the development

of wind installations and even geothermal energy. Furthermore, the use of fossil fuels for

Electricity production was controlled and reduced to a minimum during this period. Therefore,

although the development of the wind technology was foreseen in the energy generation plans

of the ICE earlier (Interview 5B, 2013), they have a lower priority within the energy portfolio of

projects.

Nevertheless, this arrangement of the system is also highly vulnerable to changing weather

conditions. Though, in 1992, electricity production from oil sources started to increase, reaching

levels of over 10% of the total electricity generation in the mid-1990s, by the year 2000, the

lower levels were reestablished again. According to the Energy Planning Sector, the 1990s spike

in the use of fossil fuels was the outcome of a combination of factors. First, a period of a four-

year drought experienced in the region, since 1992, led the Arenal dam reservoir to reach its

minimum level ever in 1994 (DSE, 2008a). Second, the drought affected the whole Central

American region; thus, reducing the possibilities to import electricity, and hence, having to

resort to the use of oil fuel thermal plants. A third cause of these changes pertains to “periodical

adverse climatologic conditions related to rainfall variability produced by a meteorological

phenomenon known as “El Niño” and other climatic variations” (DSE, 2008b, p. 11). The “El

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Niño” and “La Niña” phenomena are predicted to occur every ten years. In fact, a similar

situation began again in the year 2010.

In 2013, drivers of reliable electricity effects continued reinforcing the construction of

hydroelectric dams. In interviews during 2013, head of departments at the ICE repeatedly

pointed out to the high load factor from hydroelectric plants as a key figure explaining its

relevance in the national energy system (Interview 4E; Interview 3H, 2013). According to them,

hydroelectricity has been the main provider of base load electricity to the electrical system with

a load factor close to 100%.

In fact, resource reliability was continuously referred as a key criterion for the selection of

energy sources for electricity, as well as for their restriction. According to the interviewees at

the Energy Planning Sector and ICE project developers, the central issue for the selection of

different energy sources is the need of a backup (i.e. safeguards or energy storage system) to

tackle occasional shortfalls in net electricity generation. From their perspective, when

comparing the different technologies, dams or hydroelectric reservoirs are providers of the best-

known electricity storage systems.

The availability of hydroelectricity itself is acknowledged by the Energy Planning Sector to be

highly dependent on rainfall variability (DSE, 2008b). However, it uses oil fuel generation

plants as a backup, providing a ‘self- regulation’ mechanism to the system. From an electricity

reliability perspective, fossil-fueled thermal plants have the advantage that they do not depend

on rainfall variability, but they do on oil price fluctuations (Interview 3H, 2013).

Then, the use of oil-fueled plants began to increase, when a drought period, such as the one that

affected the region in the 1990s, undermines hydroelectricity availability. In 2010, this situation

was recurrent and raised national concerns on the oil fuel dependence in electricity generation.

However, warnings stalled as the reservoir levels were reestablished again in 2015.

Besides hydroelectricity, the advantages of geothermal energy and wind energy, in terms of

availability and reliability, as well as to complement hydroelectricity were highlighted during

interviews in 2013. For instance, references to wind abundance were also found in printed

documents of the Institute, in which wind’s potential distribution is compared to the availability

of hydropower (e.g. DSE, 2008b; 2011b; ICE, 2013c). These statements also highlighted the

fact that wind energy could partially supply the energy needed during peak demand periods in

the dry season.

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In the period under review, efficiency drivers, at the individual level and those at a systemic

level, are relevant in clarifying decisions in the national energy system. I found that most

individual accounts (i.e. coordination, learning effects and scale economies) were key

motivations, at earlier stages. Meanwhile, systemic accounts (i.e. global climate change effects,

national welfare effects, and reliable electricity effects) are mostly relevant in the reinforcement

of an established technology, in a path dependency stage.

Coordination effects of ruled-guided behavior from market regulations (e.g. standards, tariffs),

environmental impacts assessments and carbon mitigation instruments, drove decisions that

reinforced hydroelectric dams at earlier stages, as well as RORs and wind parks afterwards. In

this sense, environmental impact assessments similar to carbon mitigation and the PES were

also a useful instrument for investors to gain recognition in the national or global market. More

recently, drivers of coordination effects were initiated triggering interest in solar energy.

Learning effects clearly explain the reinforcement of hydroelectric installations and the

advances of geothermal stations. Even those encourage the introduction of innovations with

domestic expertise. The observed difference between geothermal stations and wind parks

suggests that these effects were not applicable to state wind installations.

In the case of large dams, drivers of scale economies incentivize the ICE to further expand

hydroelectrically and fulfill a regional demand for large quantities of electricity, at low cost. In

the case of private investors, drivers of scale economies would boost the construction of larger

RORs, but until now this is limited by national and regional regulations. Instead of scale

economies drivers, the efficiency gains of private investors were based on investors’

effectiveness to accomplish the task through drivers of learning effects.

All systemic efficiency accounts (i.e. climate change effects, national welfare effects and

reliable electricity effects) play a critical role in the ICE’s and the Energy Planning Sector’s

decisions reinforcing the use of hydroelectricity. Among them, drivers of reliable electricity

effects step up. Further advances in geothermal energy, wind park installations and biomass

were guided by drivers of availability and reliability electricity effects, but also limited by the

same. Although wind or biomass electricity potential could supply the energy needed during

peak demand periods, in the dry season by strengthening the reliability of the system, they are

also dependent on the installation of firm or based load energy, such as geothermal.

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7 Political Power Mechanisms in the National Electricity System

7.1 Introduction

This Chapter traces the choices between energy projects and technologies according to political

power mechanisms. Actors’ decisions, within this framework, are influenced by the

empowerment of individuals or groups benefiting from existing arrangement. Accordingly, two

drivers of political power were found in the historical analyses: i) empowerment of private

investors and ii) community empowerment. Similar to the case of legitimation mechanisms,

decision-making is based on political power relations related to the systemic accounts that are

beyond individual viewpoints (see Figure xx).

Figure 8. Political power mechanisms and drivers


The Chapter is organized into the following four sections including the introduction. Section 7.2

presents main actors involved in political power relations and their interests over time. The next

Section 7.3, explains actors logics of decisions based on mechanisms of empowerment of

private investors and community empowerment. The last Section 7.4, summarizes the main

characteristics of the political power framework and states some concluding remarks.

7.2 Actors Involved and their Interests in Decision Making Processes

During the ‘developmental state era’ (1950-1989), the ICE emerged as a new political actor.

The ICE was not alone in developing electricity. Private groups also had a role as project

developers, construction contractors of electricity projects or as consultants. Moreover, foreign

146

organizations, including financial institutions, experts, and consultancy firms, were also relevant

partners for the transfer of knowledge in earlier stages. The case of geothermal energy illustrates

this cooperation with foreign companies, since the 1970s (Interview 4C; Interview 1F, 2013).121

Together with the creation of the Energy Planning Sector in the 1980s, hydroelectric dams, and

geothermal infrastructures experienced an expansionary phase lead by the ICE in accordance

with national energy plans elaborated by the Energy Planning Sector. Their development

continued after liberalization reforms according to these centralized plans, incorporating private

investors as direct electricity producers. Private groups were also linked to international and

regional corporations within a portfolio of energy investments.

Private investors organized themselves, since the beginning, through the Private Energy

Producers Association (Asociación Costarricense de Productores de Energía, ACOPE) created

in 1990. Historically, ACOPE had been an antagonist actor of the ICE, not only because it

represented different interests within the electricity generation system (i.e. private and state,

respectively), but also ideologically. Their positions, however, have been more congruent in the

last years (e.g. in the development of alternative renewable energy sources, in the incursion of

the regional market). Although tensions exist concerning market liberalization, both have tacitly

agreed to a mixed model that integrates the ICE as a leading actor, as well as a form of

competition in some stages of the electric industry.

Besides influence peddling in electricity projects that implicated politicians from official parties

confronted by the ICE worker unions and left-wing parties, other disputes emerged between

state and private investors against local communities. These conflictual processes concerning

impacts of dams and RORs emerged as a key issue that involved distributive and ecological

aspects. The conflicts implicated landowners regarding expropriations, community- based

organizations, environmental organizations, private and state investors and the regulatory

entities, including the ICE who approved contracts with the private producers. The government,

through the Ministry of Environment, has been confluent to private interests and favored more

electricity investments.

By the year 2014, powerful actors included the Energy Planning Sector, the ICE and politicians,

where the influence of private investors was evidenced. Meanwhile, subordinated/secondary

actors who could tip the balance changing the power game in the energy system (i.e.

institutional entrepreneurs) were private and state investors, local governments and civil society

organizations. The latter with the support of international organization networks, who support

environmental organizations and indigenous rights.

121 As recalled by respondents who referred to experts and consultancy firms from Italy, New Zealand,

Iceland, Japan, Mexico, all of them countries with experience on geothermal energy generation.

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7.3 Systemic Accounts and Changes in the Power Game

7.3.1 Empowerment of Private Investors

According to political power mechanisms applied to the case, the empowerment of private

investors, throughout the history of the electricity sector, changed the power game. Though, to a

limited extent, since state actors uphold a central position in decisions. This section explains

how drivers of empowerment operated in such a manner that the more a technology profited

private investors, the more it was supported in subsequent decisions, even when other actors

preferred to change this.

In the period before the 1990s, the relationship between governing political elites and the ICE

favored the latter as a provider of efficient and standardized electricity services. The

development of dams, as well as geothermal fields, was institutionalized by the Law 449 (1949)

and Law 5961 (1976). These laws established the exclusive authority to the ICE to develop

those projects. Hence, the Institute fulfilled its mandate with the development of hydroelectric

plants and geothermal stations in the country.

In the following decades, geothermal and hydroelectricity developments continued based on

centralized plans. Although in the case of the geothermal fields, they were “… completely

established through Costa Rican ownership” (DSE, 2008a, p. 96). Though, for decades, private

construction firms have been active in public works for the ICE. Nevertheless, liberalization

reforms increased the private interest at stake in electricity projects.

First, they became direct private investors in electric plants, through the Laws 7200 (1990) and

7508 (1995) that sanctioned the ICE’s purchase of up to 20MW and up to 50MW from private

electricity projects. Second, they reduced from 65% to 35% of private companies’ ownership, in

which holders must be Costa Ricans. Third, they incorporated the BOT scheme allowing private

companies (or consortiums) to own and operate electricity plants for a maximum period of 20

years (Law 7508, 1995 Chapter II).

During interviews conducted with experts, private investors and state actors in the electricity

sector, they all agreed that liberalization reforms, during the 1990s, were a turning point in the

future institutional orientation of the energy sector. Besides the legal changes that boosted the

interest at stake from private investors’ standpoint, experts also referred to the mandate to cut

public spending in accordance to requirements agreed with international financial organizations

(Interview 1F, 2013). Through this mandate, the government of Costa Rica froze almost every

large electricity project (Battocletti, 1999).

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This situation, together with the legal authorization to involve IPP, partly justified the use of

more private capital or funds (Merino, 2003). Private investors focused on the development of

the smaller RORs, which gave way to several in just a few years. As a result, liberalization

reforms deepened changes in the political power relations through the empowerment of private

investors, while reinforcing the hydroelectricity-based energy model.

In the first decade after liberalization reforms, private hydroelectric installations continued

growing faster than other alternative renewable energy projects. In terms of ownership

composition, between 1990 and 2000, the total installed capacity belonging to the state was

reduced from 98% in 1995 to 89% in 2000. Meanwhile 11% of the total installed grid is in the

hands of private concessions or BOT (DSE, 2009a).

Graph 2. Public and private electricity projects in the national energy system (NES)


At the same time, the regulation of the electricity sector was experiencing a period of change,

along with modernization demands of public services promoted by the IMF (Interview,

2013).122

However, the regulation of the Costa Rican electricity sector has its own particularities

as it is not a competition regime, but rather a vertically integrated regime still under the ICE’s

control (Interview 2F; 2013).

Initially the regulatory authority, the ARESEP, established the prices of energy purchased by

the ICE according to the principle of ‘avoided cost’ defined as the long-term marginal cost of

122 ARESEP Antecedentes e Historia. (2014-2015). Retrieved August, 2014, from

http://www.aresep.go.cr/index.php/aresep/antecedentes-e-historia

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the system (DSE, 2008a). Later, it changed to a tariff methodology of “rate of return” (Interview

3F, 2013). This methodology refers to a process of balancing costs incurred by companies and

future estimated revenues (a risk -adjusted profit margin), also referred to as the return on equity

(ROE) or “cost plus method” (Dixit et al., 2014). 123

According to the ARESEP, a weakness of this method is the difficulty in correctly establishing

costs that reflect efficiency performance (Interview 2F; Interview 3F, 2013). Essentially, the

allocation of public resources and calculations of electricity tariffs had inefficiencies that

resulted in overpricing and profits to private investors. Besides, cases of influence peddling and

illicit sale of electricity production that involved politicians.

Consistent with studies launched by this group, between 1997 and 2001, the basic tariff with

adjustment produced a surplus of 17 thousand million colones to the private sector and, between

1996 and 2000, created a surcharge of 271 million colones to five private projects (Merino,

2003).124

Those cases, with fixed tariffs, favored at least thirteen of twenty-eight private

hydroelectric projects formalized under Law 7200 (Alvarez, 2003). While nearly nineteen

private electricity projects belonged to politicians (Romero-Perez, 2004).

Conflicts of interest were ongoing in the case of other technologies as well, for instance, in the

bid competition for the BOT geothermal station or in a biomass project (i.e. the Taboga sugar

mill) (Romero-Perez, 2004). However, they were not present in the number of hydroelectricity.

The 28 private hydroelectricity owners collectively brought in 35 billion colones annually,

while the ICE made less than 32 billion (Lindo, 2006).125

The liberalization trend continued gradually during the decade shaping the national electricity

sector; this, has been contested by social groups. The case of bill proposals aiming to deepen

reforms of the energy sector in 2000, labeled as the “ICE Combo”, was a cusp of conflicts and

marked a downturn for the neoliberal project. This resulted in political power struggles and

social protests that escalated over the time, obliging its withdrawal from Congress.

The ICE Combo was presented by the government, supported by political and economic elites,

as a necessary reform to reduce the cost of electricity, improve services, stimulate capital

investments and restrain internal debt (Solís, 2002; Bull, 2005). In the Congress, the proposal

was defended by the government in terms of eliminating the legal controls that limited the ICE’s

123 In contrast, the performance- based regulation provides incentives for improving efficiency and

reducing costs (Dixit et al., 2014). 124 As of December 2001, 17 thousand million colones were equivalent to 52 million United States dollars

and 271 million colones were equivalent to 820 thousand United States dollars (own calculations). 125 As of March 2006, the 35 billion colones were equivalent to approximately 70 million United States

dollars, and 32 billion colones were equivalent to approximately 65 million United States dollars.

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competitiveness, efficiency, and expansion possibilities (Solís, 2002). Meanwhile, the

movement against these bills, led by the ICE’s labor unions, grouped several and diverse social

groups. 126

These groups considered that those inefficiencies of the ICE existed, though they

were the outcome of intentional political decisions to create the conditions for the privatization

or corporatization of the ICE (Solís, 2002).

Other organizations, such as the Ombudsman/woman’s office, the National Comptroller and

even the right-wing Libertarian Party, a clear advocate of privatization, also questioned the

bill’s proposal. They argued against the lack of institutional controls and leeway of political

interference over electricity activities, which already existed (FECON, 2009; Solís, 2002).

These issues were denounced by the ICE’s labor unions and echoed by deputies from the left-

wing party (i.e. Frente Amplio) as well as environmental organizations (i.e. FECON). 127

The media also played a role by questioning private generation plants as compared to the ICE’s

cheapest dams. This comparison however, did not make distinction on scale or size of the

plants, neither referred to the environmental problems. 128

For the movement against the “ICE

Combo” and most of the public, the common enemy was identified in the “political class”

accused of “corruption, voracity, autism and sterility”, while the ICE continued upholding

legitimacy (Solís, 2002, p.35-36).

Meanwhile, the lack of response from ARESEP and the ICE authorities, despite the statements

of illegality from the National Comptroller and the General Procurement Office, led to a

continue waste of the public resources (Merino, 2003). In the mid-2000s, a context of expiring

contracts created an opportunity to make the necessary corrections and renegotiate tariffs. At

this time, the Attorneys’ office opened a legal investigation to all previous officers at ARESEP

who authorized tariffs without introducing corrections to nearly 15 private electricity

companies. 129

Since 1998, some contracts faced regulatory problems regarding water concessions covered by

the Law 7200, and hence, they were not renewed (DSE, 2009: diagnostic V). The effect of these

events produced a temporary slowdown in hydroelectricity installations from 2000 to 2005.

126 Among the diverse social groups against the ICE combo were communal organizations, branches of the Catholic Church, students and environmentalist groups; progressively other public workers, women

organizations, indigenous communities and other groups were incorporated (Carazo, 2001). 127 “Gobierno y privados quieren afianzar estafa de electricidad privada” FECON, 16.02.2009 128 Several publications, during 2000, single out the cheapest plants, whereby the ICE’s larger

hydroelectric stations compared to smaller private hydroelectric plants limited by law: “Diversidad en

costos de energía” La Nación, 06.08.2000; “ICE al vaivén de los políticos”, La Nación, 30.07.2000;

“Energía privada cuesta cara” La Nación, 01.08.2000; “Impugnan tarifas de generadores”, La Nación,

31.08.2000. 129 “Aresep valora modificar tarifas” La Nación 20.03.2006.

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According to national statistics, private hydroelectric installations increased from 130 MW in

2000 and then to 135 MW in 2005. In the case of the ICE, after the Angostura HP (i.e. 180

MW) went online in 2000, hydroelectric installations barely experienced any expansion in this

period (DSE, 2009: diagnostic V chart 3-10).

However, they continued spreading again by 2006, when new and larger hydroelectric projects

went online (i.e. Cariblanco, 84 MW) and a boost was experienced due to new hydroelectric

BOT projects (DSE, 2009a; 2011b). In spite of the fact that private electricity capacities

remained below the share permitted by law (i.e. the maximum limit of 30% from both private

generation and BOT), there were numerous private electricity plants. By 2008, there were 30

private electric plants (i.e. 24 hydroelectric, 4 wind and 2 biomass stations) and 45 more waiting

for approval.130

In the meantime, in the mid -2000s, the country continued in its initial stages in developing

alternative renewable sources such as the wind and the solar energy. Interest from international

organizations was directed to these technologies. For example, the World Bank funded some

small wind parks in the country, taking advantage of the high potential of this technology, but

also considering the environmental problems of relying on hydroelectricity and fossil fuel

(Anderson, 2002). In reports from the American Wind Energy Association (LAWEA) Costa

Rica was regarded with strong potential for wind parks, solar energy, and geothermal stations.

At the same time, private actors and their organizations, such as ACOPE, began to lobby by

pointing out the Central American regional market’s opportunities, and the relevance of private

investments towards reducing oil dependency. These claims were supported by a turn from the

media who alluded the missed opportunities of the existing legal framework that limits private

generation, especially when this electricity from private plants is “cheaper than the one

produced by ICE’s electricity plants”.131

Not coincidentally, in 2006, the issue of telecommunications and electricity liberalization

resurfaced again in the context of a package deal, included in the Central American Free Trade

Agreement (CAFTA) with the United States. Although the agreement left the issue of private -

state participation in the electricity sector as a matter of domestic decision, different sections of

the text were considered to have important environmental and social implications. These issues

130 “Gobierno y privados quieren afianzar estafa de electricidad privada” FECON, 16.02.2009. 131 “ICE perdería oportunidad de comprar energía a precio bajo” La Nación, 20.03.2006.

152

divided the society, on the one side the government (e.g. the Ministry of Environment), and on

the other side, environmental organizations (e.g. FECON), workers unions, and universities.132

Following Lindo’s (2006) and Durán’s (2006) analysis, at the heart of the environmental

problem was a loophole in the Costa Rican environmental law that allows over-exploitation and

commercialization of its watersheds. Particularly because current legislation does not limit the

number of hydroelectric plants per watershed, which combined with a restriction on plant’s size

(i.e. 20 MW and 50 MW), result in too many projects on a watershed. Although they are smaller

in size, the individual environmental damage comes together to create even more severe

destruction (Lindo, 2006).

Another point of difference was the aspect of foreign investment ruling. Environmental

organizations and the academia were concerned by the use of the treaty to wreak havoc on labor

and environmental laws, including difficulties of expropriations and business interest protection

(Lindo, 2006). The case of the Harken oil drilling initiated during President Abel Pacheco’s

administration (2002-2006, PUSC) already set a precedent (Durán, 2006). In spite of social

mobilizations against the CAFTA, the treaty was finally approved, in 2007, by means of a

public referendum.

The same year, the presidency launched the “Peace with Nature” and carbon neutrality strategy

by 2021 initiatives (MREC, 2008). However, environmental organizations and other groups

became also critical of the government’s proposal, particularly when the Executive favored

private interests in the project of open pit mining (i.e. in Crucitas de San Carlos, Northern

Region) and the construction of a new aqueduct in the community of Sardinal in the Guanacaste

province (Feoli, 2009). These projects were temporary halted, by an appeal to the Supreme

Court, and subsequently the works were suspended by decision of the local government.133

To sum up, decisions from the environmental office SETENA were questioned from

communities, environmental organizations, and opposition political parties. Denounces were

also related to cases of corruption and political interference involving ICE officials, which

undermined public confidence in their effectiveness towards environmental protection and EIAs

(Lindo, 2006).

132 Besides they included students, organizations of national producers, businessmen, women's and other

kinds of social organizations, as well as the major opposition political parties. 133 Environmental organizations leading the opposition to these projects sued the President and the

Ministry of the Presidency of prevarication (i.e. pervert the curse of justice).

153

There have been cases of political interference during former president Arias’ administration

(2006-2010, PLN). Members of the Executive Power pressured to favor particular interest and

were subsequently denounced by the left-wing party in 2010.134

In 2010, a deputy from the left-wing party (i.e. Frente Amplio) presented a bill proposal to the

Congress to depoliticize SETENA (Ley para Rescatar, Despolitizar y Fortalecer la Secretaría

Técnica Nacional Ambiental, SETENA, File N° 17.860, 2010). Besides strengthening the

political independence of the entity, the proposal sought to provide human and financial

resources to the regulatory body, to enhance assessment and monitoring capacities. The bill also

seeks to reverse restructuration processes, promoted by different administrations to speed up

proceedings, on behalf of competitiveness but at the expenses of exhaustive environmental

impact assessments.

Essentially, on the side of the private sector’ interests and from state project developers’

standpoint, there were great expectations regarding more expeditious proceedings of electricity

projects. In 2013, this claim came up during interviews conducted with the ICE and private

investors (Interview 4G; Interview 2A, 2013). The statement refers not only to environmental

impact assessments proceedings, but also concerns tariffs, the granting water concessions and

the sector’s general regulation.

Meanwhile, the subsequent PLN governments (i.e. Arias Sánchez, 2006-2010; and Chinchilla

Miranda, 2010-2014), in alliance with center-right wing parties (i.e. PUSC and the Libertarian

party) and congruent to private enterprise interests, focused their attention on new electricity bill

proposals (e.g. the bill proposals File No.16949 in 2008; 17666 in 2009; 17812, 2010; 18093,

2011). The bills’ purposes were mainly the opening of the sector, to speed up procedures and to

upsurge the share of independent private producers. None of these proposals passed in the

Congress due to the lack of agreement among different branches; however, they are illustrative

of the interests at stake.

Supporters of the proposals based their arguments on future electricity needs, framing the law as

relevant to handle growing electricity demands with renewable energy sources in the short and

mid- term (File 17812, 2010; File18093, 2011). They emphasis the need of private investments

since during the next ten years the country has to double its generation capacity with a required

134 Noting a recentl controversy surrounding SETENA’s approval of environmental impact report of the

pineapple grower Tico Verde S.A., though that approval had been overturned twice before. Strong

pressures led to the resignation of officials rejecting the project. See Asamblea Legislastiva, File No.

17.860, 2010.

154

investment of 9 US billion dollars (File 17812, 2010). This is an amount of investments that

exceeds ICE’s capacities. 135

As pointed out by a right-wing politician:

“Private investments are technically and economically justified because there is a need

of abundant, steady, and sustained electricity provided by a reliable range of options”

(Interview IJ, 2013).

Some ideas, included in the proposals, referred to the use of alternative renewable sources’

untapped potential in other sectors of the economy, such as the utilization of electricity

technology for transportation (File No. 17666, 2010).136

However, none of them provided

tangible measures to further develop alternative renewable energies in the country, except for

laying down the requirement of applying the net metering pilot plan (i.e. distributed electricity

generation, DEG) to all electricity distribution companies. Concerning incentives to renewable

energy sources (in general), they refer to fiscal exemptions, project selection based on price

competition (i.e. subasta) differentiated by the type of technology and scale, and the

segmentation of a regulated demand for renewable energy sources in long-term contracts (File

No. 17666, 2010; File 17812, 2010).

In the interim, a left-wing minority party promoted a more concrete initiative to incentivize the

development and the use of alternative renewable energy, without the need of a new law. The

proposal was approved by the Legislative, in 2010, removing both, import taxes and the 13%

sales tax on equipment and components for renewable energy generation and energy efficiency

for self-consumption, including solar panels, solar hot water sets as well as wind and

hydroelectricity generators (File No. 17086, 2009).137

This was clearly evidenced in the case of

DEG, where an adequate institutional framework is missing:

“Institutional barriers (to DEG) include an interconnection normative framework or

tariff for self-consumption, as well as resolving the issue of water concessions. That is

why other companies do not participate, only the ICE, (i.e. 40-400 kW)” (Interview 2A,

2013)

135 The previous bill proposal presented by former president Arias calculated this amount in US$700

million. 136 The national renewable energy potential available was calculated to be over 90% of the total demand.

A suggested possible composition of the future electricity matrix might include 80% hydro, 10%

geothermal, 5% wind parks, 2.5% biomass and 2.5% solar energy (File No. 17666, 2010, Section 6.10). 137 These changes were aimed to revert the revoking of article 38 from the Law Regulating the Rational

Use of Energy (Law 7447, Ley Reguladora del Uso Racional de la Energía, 1994). The incentive, was

annulled, in 2001, by the Tax Simplification Law (Law 8114, Ley de Simplificación y Eficiencia

Tributaria).

155

The bill proposals from the presidency, by contrast, made concrete references to water

concessions as a clear indication of their interests. It proposes that the Ministry of Environment

would be the authority entitled to grant water concessions for up to 60MW generation capacity

per project or up to 100MW if projects are in association of two or more developers. This last

point, similar to what was proposed by the Modernization Law of the ICE Combo in 2000,

allows private generators to own up to 25% of the national installed capacity, pushing the limits

to private projects capacity laid down by Laws 7200 and 7508 (i.e. 20MW and 50MW per

project and up to 15% of total installed capacity, respectively).

Additionally, they declared: “the convenience of electricity generation, transmission, and

distribution, included within the National Electricity Plan, as public interest”. The proposals

even authorized the removal of the forest cover, without any restoration or compensation (File

18093, Article 7, 2011). All these proposals, including the ones from the last administration

(2010-2014, PLN) that recommended a more regulated opening of the sector, raised major

controversy. Chambers and associations of the private business sectors (e.g. UCCAEP and

ACOPE) considered that these laws were closer to their interests, while the ICE’s labor unions

opposed the projects from the beginning.138

The rural electricity cooperatives also lined up against these Laws. From their perspective, the

aspect raising a major concern were the negative effects on cooperatives’ finances by possibly

losing their more profitable clients.139 First, these proposals focused on extending the limits of

private projects’ capacities and creating a regulated competitive wholesale market. Hence,

allowing private companies to sell electricity to national distributors and to the Central

American Market (File 18093, Article 3, 2011; Files 17666 and 17812, 2010).

Second, they proposed the legal figure of the “great consumer” (i.e. those who demand 1MW-

10 MW electricity per year). According to the bill proposals, a great consumer could bilaterally

sign contracts with public or private companies, national or regionally based, at non-regulated

prices (File 17812, Article 53, 2010). Alternatively, the cooperative sector launched another

proposal retaining more elements of the current model (File No.17811, 2010).

Nevertheless, two years after a Special Commission in the Legislative initiated the analysis of

the proposals and through several different texts, the government desisted to pursue them due to

13819.04.2010. “FIT-ICE contra proyecto ley de electricidad de los Arias”, ANEPtv; 29.09.2010.

“Empresarios meten presión a proyecto de electricidad de los Arias” Semanrio Universidad. 139 08.08.12. “Sectores ven como una provocación del Gobierno convocatoria de ley de electricidad”

Semanario Universidad

156

the lack of agreement among different branches within the Legislative.140

Another bill proposal

(i.e. the Electricity Contingency Law) produced similar apathy and was rejected by the center

and the left-wing opposition branches in the Legislative (File No.18093, 2011).

As exposed later by the media and deputies from the center-left wing Citizens’ Action Party

(Partido Acción Ciudadana, PAC), vested interests in electricity generation were implicated in

those bill proposals. In 2012, the PAC denounced that private electricity producers and

shareholders were important contributors financing the political campaign of the last two ex-

Presidents. Information on the result of such investigations revealed that the same business

groups also supported the campaign in favor of the Central American Free Trade Agreement

(CAFTA). 141

This agenda is supported by the international financial organizations. Such as the IDB, that

besides financing future dams (e.g. for the Diquís HP and the Reventazón HP) are also

interested in geothermal developments, and private wind energy projects. In recent public

declarations, IDB officials stated that their interest in Costa Rica is driven by the size of the

electricity market (i.e. considered the largest in the Central American region) and the

composition of energy sources that are less dependent on oil fuels. “The goal is to improve

Costa Rica’s energy system in terms of sources and cost […] to achieve a sustainable electricity

generation policy”. 142

However, no other alternative renewable energy technology had incentives to encourage private

investments such as hydroelectricity. Private investors and right-wing politicians referred to

institutional and political barriers hindering further developments and they blamed the ICE for

restraining further advances of alternative renewable sources. For instance, wind park

developers referred to the wind energy cap set by the Energy Planning Sector and the ICE:

“This cap is responding to political decisions rather than technical considerations” (Interview

1G, 2013).

These group of actors also accused the ICE of obstructing the progress to solar energy and DEG

by opposing the electricity bill proposals (Interview 1J; Interview 1G, 2013). While the ICE

argued that all this was the outcome of legal and political constraints beyond their control

(Interview 2A, 2013). Environmental organizations, also referred to this trend, in the electricity

140 Opposition rose from the cooperative sector and there was a lack of government interest in the context

of the pre-election campaign. “Gobierno desiste de plan para apertura de mercado eléctrico”, La Nación,

23.10.2013. 141 Financial contributions reached 220 million colones. Deputy Juan Carlos Mendoza carried out an

investigation based on registers from the PLN, the Electoral Tribunal (Tribunal Supremo de Elecciones,

TSE). 142 “Generación eléctrica privada atrae a prestamistas” LA Republica.net, 13.01.2014.

157

sector generating a new expansionist wave of public and private hydroelectric projects. But

fundamentally, they resulted from political power relations that are perpetuating vested

interests; initiated by the previous Laws 7200 and 7508, in the 1990s.143

On the one hand, environmentalists’ positions reject the implications of the bill proposals

promoting hydroelectricity and deregulating the use of rivers and water resources. On the other

hand, they argue against laws that increase the provision of incentives towards private

investments in general, instead of including specific incentives to alternative renewable energy

sources (Interview 4G, 2013).

To summarize, by the end of the period and in terms of ownership composition, out of the total

installed capacity in 2010 (2745 MW), 87% were state-owned plants and 14% belonged to

private generators according to Law 7200 and Law 7508 (DSE, 2011a, p.77). Private

installations peaked in 2012, reaching 19% of the total installed capacity, including both

concessions and BOT projects (DSE, 2009a; ICE, 2013). Graph 2 provides an overview of

public and private electricity developments.

In terms of conflictual processes, this upright model is filled with contradictions on socio-

environmental claims. The ICE Combo and the CAFTA mobilization are example of these

clashes. This trend was opposed by left-wing parties, ICE labor unions, environmental

organizations and other civil society groups. Although this group of actors is less powerful, their

mobilizations raised awareness amongst the population, questioning the legitimation

mechanisms of hydroelectricity from the communication of national and local welfare.

Eventually, an opposing process of political power emerged through the empowerment of local

communities.

7.3.2 Community Empowerment

According to political power mechanisms applied to the case of Costa Rica’s energy system,

drivers of community empowerment can potentially reinforce or change the power game in the

electricity subsector. The more communities accept or stand for an electricity project, the easier

is for a project developer to advance installations, if not the opposite occurs. This section

explains how drivers of community empowerment operated as a counterbalance of private

investors empowerment and to what extent this might favor the adoption of a different

technological path.

One of the oldest and longest episodes of confrontation on the construction of dams dates back

to the 1970s, when the first attempt to build the Boruca HP (1500 MW) was proposed by the

143 “Gobierno y privados quieren afianzar estafa de electricidad privada”, FECON, 18.02.2009.

158

ICE. The project was originally planned in combination with an aluminum exploitation plant

from the transnational Aluminum Company of America (ALCOA), which was to be located in

the county of Perez Zeledón (Southern region). However, weighty protests against these

projects originated by local people opposed to the extractive activity by ALCOA and convinced

the company to pullout from the country (Carls & Haffar, 2007).144

First explorations of geothermal fields also date back to this period. In the case of geothermal

projects, the major limitation to their future development was foreseen in the possible

environmental restrictions. For instance, parts of the geothermal systems are located in protected

areas (e.g. the geothermal system of the Rincón de la Vieja National Park) (Battocletti, 1999).

More recently, the ICE’s energy generation plans also acknowledged these constraints and is

trying to negotiate clearances to explore the resources in natural parks with environmental

authorities (DSE, 2008b; 2011b).

The direct participation of private investors in electricity generation, mainly in new

hydroelectric RORs, Were accompanied by cases of dispute with local communities. In such

occasions, hydroelectricity projects were opposed and rejected by local communities and

environmental organizations, but the aspect that produced the greatest resistance to these

projects was though not community displacement, as in the case of dams. In the cases of RORs

major concerns were the environmental consequences on water streaming and ecology, as well

as on other benefits they provide to the local economy, so called socio-environmental impacts.

According to Cartagena (2010), the struggles with electricity projects were sparked by

distributive and ecological disputes. Both aspects are confluent since the land property is

considered an important element in the socio-ecological distribution of natural resources. The

author uses the concept of socio-environmental impacts in reference to this convergence

between distributive and ecological disputes.

One illustrative socio-environmental conflict took place, in 1996, when several communities of

the Perez Zeledón county (Southern region), created a River’s Defense Committee against the

“Los Gemelos” private project seeking to protect the Chirripó Pacífico River watershed

(Municipalidad de Pérez Zeledón, 2013). The project had problems with landowners, regarding

expropriations, and with the Committee on other watershed impacts. In this case, the ICE

cancelled the contract with the private producer, in 2002, and resulted in an ensuing dispute.145

144 As the project took shape in the Assembly, the movement grew and incorporated university students

and labor unions. The Boruca dam project remained within the ICE’s generation plans and was revived in

2000. 145 “ICE en lío por anular contrato”, La Nación, 04.06.2002

159

In theory, small-scale hydroelectricity plants are considered to produce lower impacts than

dams. However, communities perceived equally the threat to their water resources and their

livelihoods. Even though the capacity of private electricity projects installed, is restricted by law

to 20 MW or 50 MW, as long as several hydroelectric stations proliferated within the same

watershed, downstream impacts became relevant, these effects were observed, by Anderson

(2002) and Lindo (2006). By the year 2000, they identified more than 30 hydroelectric stations

in the country, many of them were exploiting just three watersheds of the San Carlos,

Reventazón, and General Rivers.

Based on information from the ICE and other technical studies, the environmental organization

FECON and the university program “Kioscos Socio-Ambientales” remarked that, in the year

2000, 14 hydroelectric projects were operating at the same time in the San Carlos River basin

(Northern region), becoming the main area of hydroelectricity production in the country.146

These projects generated socio-environmental conflicts, not limited to the Northern region (e.g.

communities in the Atlantic region and the Southern region).147

The ecological implications were related to changes in the biological dynamics of the rivers, the

risk associated with the future availability of the water resource and other risks entailed in the

construction works (e.g. flooding or accidents in case of earthquakes) affecting the local

communities (Municipalidad de Pérez Zeledón, 2013). While, distributive aspects were also

present, since according to FECON, the construction of hydroelectric plants became an end on

itself, driven by profit motivations (Alvarez, 2003a).

All hydroelectric projects in operation had approved EIAs according to the requisites stated in

the Law (Law of the Environment 7554, 1995 and ARESEP Law 7593, 1996). However,

environmentalists argue that the impacts of hydroelectric projects on living communities

downstream are not captured by these technical studies. They remark that “Environmental

impact assessments are not designed to prevent this cumulative and synergic effect”, and hence,

found technical difficulties to limit electricity developments in a watershed (Alvarez, 2003b,

p.31).

Therefore, FECON has been demanding more control over private concessions. This position

expressed by environmentalists also accords with Anderson’s (2002) observations. According to

her findings Costa Rica’s regulation was not accountable on cumulative impacts (i.e. legislation

does not limit the number of projects per watershed), but neither on the vulnerability to climate

change and drought problems.

146 “Ambientalistas temen que 28 proyectos hidroeléctricos acaben con cuenca del río San Carlos”,

Semanario Universidad 28.03.2012 147 “Gobierno y privados quieren afianzar estafa de electricidad privada”, FECON 18.02.2009

160

Furthermore, concerning the vulnerability to climate change, the author considers that schemes

such as the Payment for Ecosystem Services (PES) are indirect incentives to hydroelectricity,

though efficient. As for environmental mitigation, multiple private hydroelectric plants have

entered programs of the PES for forest protection with a local nongovernmental organization,

while others have started reforestation projects within their surrounding watersheds. However,

the majority of small-scale hydroelectric plant production occurs during periods with high

inflow, hence largely affected by the influence of changing weather patterns (Bakken et al.

2012). As pointed by Lindo (2006), similar forms of subsidies or compensations could be used

to promote alternative renewable sources and try to reduce river exploitation.

By the end of the 1990s and the 2000s, national conflicting processes were centered between

two main antagonist interests. One group was represented by the government, the interest of

economic groups and international financial organizations that supported more private

initiatives according to the formula proposed by the IMF. Another group was made up of

environmental organizations, together with community groups, supported by the left-wing party,

university programs and the ICE’s worker unions, who brought attention to the socio-

environmental conflicts of private electricity projects.

As indicated by Cartagena (2010), the confluence between distributive and ecological aspects

among the second group of actors explains their coinciding demands against private investors.

Moreover, more active environmental organizations in the conflicts (e.g. Yiski and

APREFLOFAS) were closer to socio-environmentalist positions. This position is different from

traditional conservationist organizations focused on ecosystem management, avoiding social or

public controversy; some of their leaders are public servants, easily shifting between public

administration and NGOs. Yet, this convergence was relevant balancing forces in the national

struggles of 2000 over electricity reforms during the ICE Combo mobilizations. 148

Even though the environment was not the main concern of the ICE Combo mobilizations, led by

worker unions, neither was significant in numbers the environmental organizations participating

in the protests, environmentalist claims were considered important in the political arena. As a

result, the environmental sector was incorporated in a Special Mixed Commission, created in

the Congress, to formulate an alternative law proposal (Carazo, 2001).149

The so-called “social

representatives”, integrated by communal and Catholic church delegates, environmentalists,

148 According to Cartagena (2010), at the local level, there were also a convergence between

communities’ dynamics and the work of civil servants, in decentralized departments in the Region or ICE

worker unions and the Water and Sewage Company (i.e. AyA). 149 The Special Mixed Commission is a legislative figure that integrates deputies and people external to

the Congress as advisors without right of vote.

161

students and workers unions representatives, conceived a Law proposal for the modernization of

the ICE (Ley para de Fortalecimiento del ICE, File 16200) (Carazo, 2001; Cartagena, 2010).

Nonetheless, the position from socio-environmentalists, were even more against private

electricity generation than the ICE’s workers unions. Therefore, in 2003 fundamental

differences emerged between environmental organizations and worker Unions representatives,

which at the end wrote a different law proposal. The focus of disagreement was precisely the

socio-environmental regulations of hydroelectricity, proposed by communities and Catholic

Church delegates, environmentalists and students representatives, as long as the ICE’s worker

unions considered them limitations to the ICE’s scope of action.

Cartagena (2010) summarizes the socio-environmental organizations’ position concerning

electricity generation on four points. First, the environmentalists’ experience with private

producers was negative because it was involved in several conflicts since the 1990s. Second,

environmental organizations considered that private projects never promoted the energy self-

sufficiency of communities or private consumers, though they did create a business and vested

interests. Third, they rejected the bill proposal’s implications because, in terms of water uses,

the proposal gave priority to electricity over other uses, contrary to integrated watershed

management. They also deregulated the use of rivers; while excluding incentives to alternative

energies.150

Fourth, the ICE Combo allowed the intervention of protected natural areas for

geothermal electricity generation, creating a precedent for hydroelectricity and large-scale

tourism.

In relation to that, the bill proposal allows land expropriations in state protected areas and

agricultural lands in favor of private developers, excluding communities, indigenous people and

consumers in decision-making processes. A key aspect viewed from a socio-environmental

perspective. As pointed out by the author, amongst the main concern of environmental

organizations was that, according to them, the proposals put the “immaculate character” of

natural protected areas at risk (Cartagena, 2010, p. 55).

In the end, the social representatives’ proposal exceeded the ICE’s demands and interests as an

electricity provider. In their proposal, environmentalists opposed energy generation in natural

protected areas and they also demanded more citizens’ participation, information and

consultation mechanisms to control hydroelectric projects (Carazo, 2001; Cartagena, 2010). In

the law drafting, they even proposed to eliminate Laws 7200 and 7508 (i.e. private electricity

150 Moreover, the law created incentives to fossil-fueled electricity, but not to research and use of

alternative renewable sources.

162

generation) stating that electricity generation is a public service and a duty from the state, the

public companies and the rural cooperatives (Cartagena, 2010).

To support these claims would have been inconsistent with the ICE’s interests. By May 2000,

the ICE had proposed the Boruca HP and in July, the Angostura HP commenced its operational

phase, two large hydroelectric projects that demonstrated differences in terms of developmental

perspectives (i.e. legitimation claims).151

Meanwhile, projects with alternative renewable

sources were at initial stages, mainly geothermal fields and wind parks that had their

expansionary phase during 1994-2000. In their initial period, both wind parks and geothermal

stations did not raised conflicting interests or competition for resources with other sector or

groups in the society.

After mobilizing different societal groups and achieving the withdrawal of the law, the

movements of the 2000s did not articulate a concrete political action at the time. Yet, the events

of the ICE Combo, similar to the CAFTA mobilizations in 2007, did become crucial for the

future of the national political trajectory. Basically, the events substantiated differences in

developmental perspectives of electricity projects concerning the ICE’s expansionist view and

socio-environmental organizations. Moreover, mobilizations were relevant and questioned the

legitimation of the two traditional political forces (i.e. PLN and PUSC), changing the power

game in the 2014 elections.

This finding supports previous research into this brain area that states the ICE Combo gave a

national dimension to conflictual processes from electricity projects at a community level (e.g.

Lindo, 2006). It also created synergies between communal based groups with ecological

concerns and environmental organizations with distributive approaches. The organization of

national meetings of communities affected by hydroelectric projects is one example of these

synergies.

Other authors’ findings suggest that the mobilizations against the ICE Combo reinforced a

development trajectory of the electricity sector in a different direction from other countries in

the region. Particularly in attention to positive aspects, for the most part, the sector avoided

privatization taking other forms of gradual structural adjustments (Solís, 2002; Bull, 2005),

including the possibilities to maintain lower energy costs, higher efficiency (i.e. low production

losses), and high electricity coverage (Lindo, 2006). The present research found that in fact, the

same trajectory continued, but this included the negative aspects concerning latent conflicts of

151 “ICE retoma Boruca” La Nación, 21.05.2000; “La Angostura prende máquinas” La Nación,

21.07.2000.

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the energy development model, based on building dams and RORs, lacking a counterbalancing

weight or alternatives.

The concentration of several RORs, in the same watershed, has been increasing the awareness

of hydroelectric problems among communities and based-root organizations concerning the

competing uses of water at a local level (Municipalidad de Buenos Aires, 2013; Municipalidad

de Perez Zeledón, 2013). According to the FECON, out of sixty private electricity projects

under the ICE’s evaluation, since 2012, ten have loose conflicts with communities in the

southern counties of Perez Zeledón and Buenos Aires. In 2013, these two municipal councils

declared a moratorium to hydroelectric dams, in their counties, until there is a planning proposal

or a project to secure water provisions for human consumption.

Among issues that concern communities are that those ten projects, located in seven rivers of

the region, where hydroelectric projects are in conflict with drinking water. In the county of

Perez Zeledón, there is one water concession (license) granted to the Costa Rican Water and

Sanitation Institute (AyA), since 2007, for the provision of drinking water to the communities.

This alone cannot cope with community needs.

Moreover, socio-environmentalist claims have been historically present in the Municipality of

Perez Zeledón, where the River’s Defense Committee has been protecting this area for 15 years.

People from affected communities also argue there is a lack of transparency and information

about project developments. According to them, the rumors of some investors buying land was

the first indication they got from intentions of building hydroelectric plants in the river.

Communities also claim that the private acquisition of resources has the consent of public

authorities.

In response to recurrent demands of citizen’s participation and on incentives to alternative

renewable sources, ARESEP recognized the need to introduce changes in the regulation of the

electricity sector. According to the regulatory body, the main challenge facing electricity

services is the integration of community participation in decisions on a local and national

level.152

In addition, efforts have been directed to overcome difficulties finding methodologies

to set tariffs according to the characteristics of different renewable energy technologies

(Interview 2F; Interview 3F, 2013).

In 2013, the FECON organized the “Meeting of Communities Threatened by Hydroelectric

Projects in the Southern Region”, gathering together 70 participants, from 30 communities of

the Southern region, as well as people from the Northern, the Caribbean and the Chiriquí region

152ARESEP Antecedentes e Historia. (2014-2015). Retrieved August, 2014, from

http://www.aresep.go.cr/index.php/aresep/antecedentes-e-historia.

164

of Panamá. The meeting joined efforts concerning the construction of 10 new RORs and the

potential privatization of up to 90% of the rivers in the Southern region. They demanded a

cessation of the hydroelectric projects and to respect the moratorium of projects from municipal

councils and the indigenous autonomy. 153

Furthermore, the organizations at the meeting also claimed support for the Water Law and the

constitutional reform that lays down water as a public good and human right (Ley para la

Gestión Integrada del Recurso Hídrico, File 17.742). The Water Law was approved in first

debate at the Legislative in 2014 after more than ten years under discussion, although

consultations to the Constitutional Court halted the process. The incoming administration of the

Citizens’ Action Party (PAC) supports the project that should be discussed in a second

debate.154

While communities were gathering together in the meeting against hydroelectric projects, two

other similar events were taking place in San José, but with a different constellation of actors.

One was the 1st Seminar on Development and Exploitation of Solar Photovoltaic Energy in

Costa Rica and the other was the 2nd Annual Forum on Prospects for LNG and Natural Gas in

Central America. The balance of political power between them was quite different.

In the first case, the initiative was organized by ACOPE together with the Costa Rican Solar

Energy Association (ACESOLAR), the project Accelerating Renewable Energy Investment in

Central America and Panama (ARECA) launched by the Central American Bank for Economic

Integration (Cabei) and the German International Cooperation (GIZ) Program Renewable

Energy and Energy Efficiency in Central America (4E). This seminar is an example on how

ACOPE mobilize support through networking permanently with national actors and

international organizations.155

The seminar approached different aspects supporting or

restraining solar energy development in the country and it also had educational purposes to

increase the public and private sector’s interest on solar energy (part of the new renewable

energies) as a crucial topic in the country.

In the second case, the forum was launched by the Institute of the Americas, an inter-American

public policy think tank, located at the University of California, San Diego (UCSD), working

with public and private sectors in the U.S. and Latin America cooperation to encourage

investment and information-sharing in energy and technology markets. Sponsors of these and

153Encuentro de comunidades amenazadas por represas en la Zona Sur (2013, September 26). Retrieved

December, 2013, from http://www.feconcr.org/index.php?option=com_content&task=view&id=2256 154 “Sala IV se trae abajo proyecto de ley sobre protección del agua”, La Nación 10.08.2014, February

2015. 155 Seminar sponsors were Juwi, Enel Green Power and the Initiative MIPYMES Verdes from Cabei.

165

similar activities in the region are CAF Development Bank of Latin America and Wärtsilä

North America, Inc (a subsidiary of Wärtsilä Corporation and market leader in diesel and

natural gas business, as well as U.S. defense systems supplier). Indeed, the forum was an ideal

platform to lobby in favor of LNG and natural gas companies, as well as to share what they

considered key energy trends and opportunities for Central America, referred as “the North

America unconventional resource revolution” and “the Golden Era of natural gas”.156

Moreover, a different profile of participants also indicates political power misbalances. In

contrast to the Forum on Prospects for LNG and Natural Gas in Central America, in the Costa

Rican solar seminar, private participants were more numerous (i.e. 66% against 46%), while

government actors had a lower representation in the latter (i.e. 28% against 42%). Moreover, in

the natural gas forum, authorities of the Energy Planning Sector were present also as speakers

(i.e. the Ministry of Environment, the ICE’s presidency).

In addition, the profile among the private actors themselves was also different between events.

In the case of the solar energy forum, the majority of the private actors represented small-

medium companies or independent consultants who are based in Costa Rica. Although, some

managed to have regional operations in Central America, the Caribbean and South America

(e.g. Agua Imara), few of them worked as subsidiaries of energy global corporations of the size

found in companies from the oil and gas sector (e.g. Juwi, Enel Green Power). In the case of

natural gas, larger firms prevailed.

Nevertheless, it was interesting to notice a growing attention for alternative renewable sources,

in particular solar energy. The year 2010 was a critical one, since most actors organized

themselves, such as ACESOLAR and the 4E Program. Currently, the presidency of

ACESOLAR is held by a representative from the university, while the board of directors

includes representatives from the industry chamber, the German-Costa Rican chamber, the

organizations Greenergy World, Enerplanet, Consortium, and the 4E Program from the GIZ.


Before the move towards the market, Costa Rica’s renewable energy model was already

grounded in institutional arrangements that favored autonomous institutions, like the ICE,

through forms of state empowerment. In the cases of the hydroelectricity and geothermal

stations, agency was executed by the ICE’s employees since the initial phases. With the direct

156 Other companies and multinationals like Shell, Total, General Electric, GDF Suez Energy were also

among sponsors.

166

incorporation of private investors, the actor constellations changed towards more private

participation, originally reinforcing the hydroelectricity path through decisions that created a

path dependency based on the empowerment of private investors.

Liberalization and market reforms in the sector effectively empowered private actors and, on

occasions, favored the creation of vested interests in electricity infrastructure, mostly smaller

RORs. Private participation in public projects, as well as interest of foreign companies

represented by national private groups, were nothing new in the national electricity

development. First, in some cases, there were family connections between politicians and

private investments. Second, the interests of the private (electricity) sector (e.g. further inclusion

in the national and regional electricity market) have influenced governments, policies, and bill

proposals.

Another consequence of these processes is the changing status of the ICE, who upholds political

power, but shifts from ‘extraordinary’ to ‘ordinary’ institutional entrepreneur. Just like any

another commercial firm, the institute’s goal is to pursue economic competitiveness, nationally

and regionally. These processes were supported by politicians (i.e. center-right wing political

parties), private investors and related associations.

While in terms of renewable energy sources, the composition did not changed much in terms of

type of sources, but it did in terms of size of installations. Instead of a model based on large

dams, geothermal stations and oil fuel plants, the model incorporated several RORs and some

wind park installations and biomass electricity stations. Overall, the period under analysis and

the expansion of the hydroelectric model was reinforced with small variations by political

power sequences.

On the other hand, latent conflictual processes were present during the period. One remarkable

antagonistic trend is community empowerment against the prevailing electricity model.

Generally, this model confronts the state with subordinate groups (indigenous and non-

indigenous) that are mainly local communities affected by some electricity projects. The

findings, in the current study, identify drivers of community empowerment, possibly changing

the power game, though indirectly and to a limited extent, because state and private investors

have more weight in the sector’s decisions.

Basically, those clashes evidenced differences in developmental perspectives of electricity

projects, also concerning the ICE’s expansionist view, and socio-environmental organizations.

Moreover, mobilizations were relevant; questioning the legitimation of the two traditional

political forces (i.e. PLN and PUSC) and changing the power game in the elections of 2014. The

present research found out that, in fact, the same trajectory continued, but it included the

167

negative aspects concerning latent conflicts of the energy development model based on building

dams and RORs, while lacking a counterbalancing weight or alternative.

168

8 Legitimation Mechanisms in the National Electricity System

8.1 Introduction

This Chapter comes across presenting the choices between energy projects and technologies

according to legitimation mechanisms. Actors’ decisions within this framework are based on

subjective orientations and beliefs of what is appropriate or morally correct. Accordingly, three

drivers of legitimation were found: 1) the communication of actions against global climate

change, 2) national welfare, and 3) local welfare.

In the case of such legitimation, explanations, even individual decisions on projects and

technologies, allude to the energy system as a whole (i.e. technologies are appropriate or

morally correct to the overall system). Therefore, in this section the individual accounts in

decision making are incorporated within systemic explanations, illustrated in Figure 9. The

historical analysis focuses on the 1990-2014 period, with references to previous stages or future

expectations towards carbon neutrality 2021.

Figure 9. Efficiency mechanisms and drivers


The following sections explain how efficiency drivers operate over time. After the introduction,

Section 8.2 briefly presents actors involved in the legitimation framework. Subsequently,

Sections 8.3, 8.4, and 8.5 elaborate on drivers of climate change communication, national

welfare communication, and local welfare communication respectively. The Chapter ends with

Section 8.6, including some preliminary conclusions.

169

8.2 Actors Involved and their Interests in in Decision Making Processes

The development of dams, as well as geothermal fields, was institutionalized by Law 449

(1949) and Law 5961 (1976), which laid down the creation of the ICE and the competencies to

develop the national energy generation sources, particularly hydroelectricity and geothermal

energy. In this period, the ICE gained autonomy and a good reputation from politicians and the

general public and emerged as a new political actor, with the capacity to set and change norms

in energy decisions. While the characteristics of dams, in terms of scale economies, were

suitable to achieve national development goals (e.g. economic growth, poverty reduction).

Those large infrastructures continue advancing due the expertise of the ICE’s employees in

building dams, the support of international financial organizations and other actors in the global

arena, such as powerful non-governmental organizations and industry players. Those actors

supported the construction of national hydroelectricity installations based on developmental

aims, ensuring “that dams are built safely, efficiently, economically, and without detrimental

effects on the environment”. 157

They not only provided funds for the constructions, but also

capacity building.

In the 1990s, low carbon electricity production became another goal of national energy systems

worldwide. The government and the Energy Planning Sector; took advantage of a national

electricity sector already low carbon, thanks to hydroelectricity, as a platform to impel global

climate change commitments and carbon mitigation strategies. In the case of the ICE, carbon

emission reduction was a goal included in the performance indicators of electricity projects. The

Ministry of Environment has been also framing this goal according to “green growth” economic

aims.

However, on a local level, the construction of state-owned dams, as well as several privately

owned RORs suffered legitimation problems. People from local communities, concerned about

the negative impacts of hydroelectric plants, gained support from national and international

organizations, researchers and activists. Their claims were echoed, on a global level, when the

World Commission on Dams (WCD)’ principles were launched in 2000. The work of the Costa

Rican Ecologist Federation (FECON), one of the main national environmental organizations,

created in 1989, has been consistent with the WCD principles.

Meanwhile alternative renewable energy sources are not among energy priorities in decisions

making processes. In their preferences between technologies, different actors pointed out to the

appropriateness of geothermal and hydroelectricity dams. Even though, project developers

157 The Era of WCD belongs to the past. (2011-2012). Retrieved January 2014, from http://www.tcsr-

icold.com/Detail/49

170

remark that the implementation of the Net Metering Pilot Plan (i.e. distributed electricity

generation, DEG) has been positive, not only from the perspective of users’ acceptance (one of

their indicators), but also because an alternative renewable energy source like solar energy is

leading (Interview 2A, 2013).

By the year 2014, most relevant actors in the legitimation framework are those who set the

norms and have the capacity to rule the energy system, these being basically the Energy

Planning Sector, the ICE, and the politicians. While those who consensually or antagonistically

follow the rule setting are: the state and private investors, local communities, and the general

public. Institutional entrepreneurs, among secondary actors, are civil society organizations and

the influence of international organizations with the capacity to tip the balance (in terms of

legitimacy) of the ruling elite.

8.3 Systemic Accounts and Legitimation Mechanisms

8.3.1 Global Climate Change Communication

According to legitimation mechanisms of actions against global climate change applied to the

case of Costa Rica’s energy system, it is appropriate and morally correct to make energy

decisions that reduce global climate change impacts. Thus, the legitimacy of actions against

global climate change imply that the more a technology can contribute to reduce CO2, the more

it is legitimized and reproduced in subsequent decisions. This is connected to the legitimation

axis of the national initiative of carbon neutrality.

Since the 1990s, Costa Rica’s government, took advantage of global policy instruments for CO2

emissions reductions (e.g. JI and CDM) with positive results, particularly regarding the

country’s forest conservation strategy. Similarly, by the end of the 2000s decade, the

government took advantage of the global climate change framework as a platform to impel the

country’s mitigation policy through the “Carbon Neutral” strategy. Although, these policies,

including carbon neutrality, did not trigger, at least initially, significant changes in the energy

sector, they provided the country with another point for international recognition.

The carbon reduction strategy, in the electricity sector, was not a priority in the country given an

energy mix predominantly based on low carbon energy sources. Consequently, diversification

of renewable sources was not really urgent since the electricity system was already low carbon-

based, largely thanks to hydroelectricity. However, the government has not submitted any

explicit proposal either for other oil-based energy subsectors, such as transportation.

171

Meanwhile, the effectiveness of hydroelectricity, as a mitigation strategy, has not been at

question. This technological advantage is important in the communications from the

perspective of institutions working on climate change or energy at a global level (e.g. the

UNFCCC, the US Energy Agency, the World Bank or the Chinese Banks), as well as from the

Costa Rican government’s perspective. However, in the eyes of the ICE, mitigation goals have

not been central in decisions between technologies.

Interviewees at the ICE’s planning departments referred to the CO2 emissions reduction target

as an additional criteria indicated by the government and the Energy Planning Sector, rather

than an internal commitment of the organization (Interview 4L, 2013; Interview 3H, 2013).

Carbon emission reduction per se was a goal included in the performance indicators of

electricity projects. For instance, the wind park (i.e. La Tejona) and the Rural Electrification

Program, incorporated CO2 emission reduction targets from the use of the wind-park and solar

systems, respectively (MINAE, 2005; Manso, 1998).

However, their position in the global climate change debate has been quite conservative,

questioning the global climate change concept itself and pointing to the use of the term “global

warming” instead of “global climate change”. According to managers at planning departments,

the confirmation of climate change would need the analysis of longer period series of data,

which are not available (Interview 4L, 2013; Interview 3H, 2013). Similarly, the Energy

Planning Sector acknowledges that the availability of hydroelectricity is highly dependent on

rainfall variability (DSE, 2008b). However, the cause of these changes is not regarded to global

climate change but to cyclical weather patterns.

“Periodical adverse climatologic conditions related to rainfall variability caused by

meteorological phenomena such as “El Niño” and other climatic variations” (DSE,

2008b, p. 11).

At the same time, the effectiveness of hydroelectricity, as an adaptation strategy, is highly

relevant in the eyes of the ICE and the Energy Planning Sector, but this aspect is more closely

linked to reliable electricity effects. Comparing the different technologies, officials, from the

ICE’s planning departments, place dams or hydroelectric reservoirs first “as providers of the

best known electricity storage systems to tackle occasional shortfalls in net electricity

generation” (Interview 3H; Interview 4E, 2013).

In the 1990-2014 period, climate change gained the attention of the Energy Planning Sector and

the ICE. This occurred as the government took further steps positioning the country,

internationally, as a carbon neutral nation and as a consequence of ‘periodical adverse

climatological conditions’. Nevertheless, the findings of the current study go further to suggest

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that the drivers of such discourses, in the case of Costa Rica, were based on efficiency claims,

rather than legitimation.

8.3.2 Communication of National Welfare

According to legitimation drivers of national welfare communication, the more communities or

societies accept or stand for an electricity project, the easier it is for a project developer to

advance installations. Hence, it would be appropriate and morally correct to make energy

decisions that produce national welfare in terms of poverty reduction, job creation, economic

competitiveness, etc. Drivers of national welfare, reinforce technologies that increase these

effects because it is the right thing to do based on subjective beliefs.

Since earlier stages, hydroelectric dams became the main electricity generation infrastructure of

the national system. During the “Developmental State” era, the ICE took advantage of

economies of scale from dams, developing efficiencies at individual level of projects to provide

large quantities of electricity at low cost. Its dominant position was reinforced in subsequent

decades, partly explained by efficiency mechanisms, but also upholding this position by logics

of legitimation.

The development of dams, as well as geothermal fields; were institutionalized by Law 449

(1949). In Law 449 (1949) it was established that the ICE’s mandate was that of “controlling

hydroelectricity utilization to strengthen the national economy and the welfare of the Costa

Ricans” (Article 1). Similarly, the emergence and expansion of the geothermal resource was a

matter of public interest for the state, as stated in the Geothermal Law 5961 (1976). This

statement was confirmed by project developers at the ICE. According to interviewees, the goal,

at that point, was to develop an “ambitious and innovative project with renewable sources of the

country”, which needed political and financial support from different actors (Mayorga, 2013, p.

9).

On a national level, dams rendered numerous social and economic benefits to accomplish goals

of the country’s national electrification. As pointed out by Bull (2005), the ICE not only gained

a good reputation and credibility regarding its efficiency and technical standards, but also

provided political results to the governing elite in terms of content voters that benefit from

electricity services. Besides, the Institute also gained legitimation in the eyes of the general

public.

Furthermore, the technology was largely supported by international financial organizations

since the beginning and professional associations, such as the International Commission on

Large Dams (ICOLD), who considered dams “appropriate” in order to fulfill energy needs from

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the population and reach important levels of economic growth (WCD, 2000). According to the

World Commission on Dams (WCD), multilaterals were considered strong particularly among

countries that have not built many dams and do not have local planning and construction

expertise and capacity.

“In Costa Rica, which relies on hydropower for roughly 90% of its power generation,

the World Bank and the IDB had directly supported over half of the installed

hydropower capacity by the mid-1990s” (WCD, 2000, p. 78).

Likewise, international financial organizations not only provided funds for the construction of

dams, but also capacity building. In fact, at a national level, Costa Rican engineers and

politicians who held high positions in the electricity sector (i.e. related to the ICE) were trained

abroad and became members of consolidated international professional organizations. One of

them is ICOLD ensuring “that dams are built safely, efficiently, economically, and without

detrimental effects on the environment”.158

Between 1990 and 1996, the executive chairman of

the ICE and CNFL was the national representative of ICOLD in Costa Rica.

By the end of the 1990s, the results were quiet positive in terms of national welfare and their

communication was effective for the energy-planning sector. According to regional reports and

national statistics, the ICE provided an integrated system with national coverage of electricity

and communication networks that reach 95% of the population in 1999. Moreover, the

electricity price was one of the lowest in Central American, mainly due to hydroelectricity,

while costly fossil-fueled electricity generation has been dominant in the other countries (PEN,

2008).159

At the same time, the ICE itself enjoyed a special standing in the society. For instance, Amador

(2000) analyses the myths surrounding the ICE arguing that the institute became a complex

symbol for the Costa Rican population (i.e. external myth), connected with a range of words

including ‘innovation’, ‘technological sovereignty’, ‘welfare of the popular sectors’, ‘human

protection’ and ‘community solidarity’ (Amador, 2000, p. 1). This was combined with an

internal Institute’s myth of creating a “new man” and characterizing it with a messianic

sentiment of a historic mission to serve the Costa Rican people (Amador, 2000).

Moreover, such achievements being the outcome of own resources, developed by a Costa Rican

company, brought up aspects of national pride. For instance, during the 1995-1998 period, the

geothermal installed capacity reached up to 110 MW, as pointed out by the ICE’s planning

158 The Era of WCD belongs to the past. (2011-2012). Retrieved January 2014, from http://www.tcsr-

icold.com/Detail/49 159 ICE, 2013. Indice de cobertura eléctrica 2013.

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managers “it was completely developed through Costa Rican ownership” (Mayorga, 2013, p.

40). However, since the beginning, it was clear that in the case of geothermal projects, the major

limitation to their future development was the possible environmental restrictions because part

of the geothermal systems were located within protected areas (e.g. the geothermal system of

the Rincón de la Vieja National Park) (Battocletti, 1999).

In the case of dams this position is even more evident. In the year 2000, the ICE’s project

managers presented the Boruca HP (i.e. 1500 MW) as a project that will deliver several national

and local welfare. They include supplying 60% of national energy demand, selling electricity to

the Regional Electric Market during the first 5 years, and granting benefits to local communities

through the generation of employment and tourism potential. Furthermore, project developers

highlight the lack of other energy alternatives for Costa Rica (Sacchi, 2002).

By contrast, in 2000, a report from the WCD also recognized the significant contribution of

dams to human development, but also remarked the elevated cost it implies for people to be

displaced, communities downstream, taxpayers and the environment, stating that “in too many

cases an unacceptable and often unnecessary price had been paid to secure those benefits”

(WCD, 2000, p. 310). This conclusion had repercussions on national energy decisions when, in

2005, the WB and the IDB, declined to finance the Boruca HP (Carls & Haffar, 2007).

The incorporation of private investors after liberalization reforms, did not alter the pattern of the

electric system based on hydroelectricity, on the contrary, it was reinforced through the

proliferation of RORs. The aspect of environmental sustainability was highlighted as one

advantage of these smaller hydroelectric plants. According to the World Bank, “run-of-the-river

projects differ from conventional hydropower projects in that they require no water storage and

are less likely to alter environmental flows” (The World Bank, 2008). Private developers also

argue in favor of them, since they do not interrupt the river flow. Interviews with private

investors from this period also pointed out its relatively low footprint (Interview 5I; Interview

5M, 2013).

Nonetheless, support towards larger hydroelectric projects, among the ICE and development

banks, did not change during this period either. Hydroelectric installations continued growing

mainly driven by claims of national and regional growth of electricity consumption (Carls &

Hafar, 2010). In 2008, the government declared the Diquís HP, a downsized version of the

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Boruca HP, a project of national convenience and public interest, even with pending

Environmental Impacts Assessment’s proceedings among other legal inconsistencies.160

A declaration of national convenience implies that social effects overpass socio-environmental

impacts, meaning that a regular Environmental Impact Assessment wouldn’t be enough (i.e.

cost benefit assessments at individual level). These logics are comparing, and opposing, the

benefits at national level with the effects at local level. The government, the Energy Planning

Sector and the ICE support the continuation of dams based on drivers of national welfare

communication. Meanwhile, the local welfare of hydroelectric projects, large or small, are

questioned by communities and environmental organizations based on problems of local

sustainability. In fact, the declaration of ‘national interest’ of the Diquís dam was followed by

the opposition from local, national, and international organizations. This indicates problems of

legitimation for the local welfare communication, possibly reversing legitimation mechanisms

for the reproduction of hydroelectric projects in future decisions.

This aspect evidences a change, in terms of external and internal perceptions or myths, of the

institute as well. As pointed out by the ICE’s presidency, “nowadays, the environment is more

aggressive and centered on the debate of competitiveness” (Interview 4N, 2013). In this sense,

the ICE behaves with a commercial purpose to sell services, but the balance sheet is more

important in telecommunications that in electricity. Internally, there are also changes in people.

The same official remarks the loss of membership from the ICE’s employees: “There are micro-

cultures within the ICE and there is a global outfit. Employees are very creative in project

design in their own spaces” (Interview 4N, 2013).

Those statements confer to high levels of confidence in engineering capacity of the ICE within

the institute. Among energy sources, dams and geothermal fields installations are guided by the

higher standards as they are considered an endogenous technology.161

These aspects denote

logics of efficiency, but also reinforced by legitimation in terms of national welfare

communication.

The Diquís dam is an example of this reinforcement and increasing electricity tariffs provided

the setting for the government and political parties in campaign to declare this project as a

priority. After years postponing the decision, in political discourses towards elections in 2014,

politicians referred to the Diquís hydroelectric project as the solution to national problems such

160 14.07.2011. “El Diquís, frente a la jurisprudencia de la Corte IDH”; 01.11.2012. “Ilegalidades del

Proyecto Hidroeléctrico Diquís”. 161 The term, endogenous technology, refers to a technology that is being produced, used and reproduced

in a structurally confined production system. The knowledge needed is locally available and disseminated

in the society; and the production organization is embedded in the local institutional setting (Müller,

2011).

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as the cost of living, inequality, or poverty (Araya, during forum in 2013).162

The dam, also

became the center of the renewable energy scenario required to accomplish the country’s goal of

carbon neutrality in 2021 (MINAE, 2010).

On a global level, there is also evidence of this reaffirmation of dams’ advantages in a context

of global climate change. Differing from the principles and suggestions of the WCD in 2000, in

2012 the World Bank Vice-President for Sustainable Development and several officers from

developed and emerging economies, such as the United States, China and Brazil, declared that

there is no such thing as a “without dams alternative”, particularly, in light of climate change

mitigation. The opposite applies to ROR, considering “that a few large dams were much better

than many small dams, both for the environment and for the economy”.163

What is more, these arguments marked a distance between dams and ROR, while the

possibilities of alternative renewable sources were obviated or at least not mentioned within

these statements. The perspective of other actors concerning the appropriateness of renewable

energy sources, including the alternatives, revealed that their preferences are not so different

from the government and international organizations. Furthermore, their drivers are similar,

except in the case of environmentalists who made reference to global climate change and local

considerations.

During interviews in 2013, politicians and the media respondents commented that their

preferences between sources depend on which is better for the environment or which prevents

oil dependency (Interview 1I; Interview 4Q, 2013). Following such responses, the interviewed

consider that besides hydroelectricity, geothermal is preferable, followed by solar energy, wind

energy, and biomass. In opinion of right-wing politicians (i.e. Movimiento Libertario, ML),

large dams are a priority, but delays in projects caused by social opposition put geothermal

stations as the second best option (Interview 1J, 2013). Solar energy is gaining attention from

private developers and right-wing politicians as well, in applications at a utility and consumer

level, such as the DEG (Interview IJ, 2013; Interview 5D, 2013).

In fact, since 2010, a group of bill proposals were submitted by deputies from the official party

(PLN) and the right-wing party (ML) to allow geothermal exploitation in natural protected areas

by the ICE (Files No. 17680; 17707), and to incorporate private actors into this activity (File

162 In a context of increasing electricity tariffs, presidential candidate J. Araya referred to the Diquis dam

with the following statement “the main enemy of communities is poverty” (Forum: “PLN future

energy…” 01.10.12). 163 The vice-president also pointed out the example of water evaporation, much larger in small projects

than in larger ones, and also to the question that should be asked “what happens if this project is not

built?” (The Era of WCD is belonging to the past. (2011-2012). Retrieved January 2014, from

http://www.tcsr-icold.com/Detail/49)

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No. 18182). Their arguments to change existing laws that lay down the exclusion of commercial

activities in natural protected areas and the exclusiveness of the state for the exploitation of

geothermal resources alluded to the utilization of geothermal energy as “a source of national

development and sustainable financing to the National System of Conservation Areas” (File No.

17707, Art. 1) or “human wellbeing”, “to pursue national sustainable development and

ecologically sustainable of Costa Rica” (No. 18182, p. 1). The proposals also make reference to

low carbon emissions of geothermal energy.

Environmentalists interviewed in 2013 favored the geothermal energy alternative first, followed

by dams, as an option for electricity generation at larger scales (Interview 2J; Interview 3E,

2013). Yet, in the case of dams, environmentalists’ saw them as a response technology to global

climate change mitigation and adaptation. According to them, “Only as long as dams are

constructed properly and guarantee fair compensation to displaced communities” (Interview 2J,

2013).

In general terms, respondents from environmental organizations opt for smaller developments

that take advantage of primary energy sources (i.e. solar energy, wind energy and wave

energies) followed by biomass, geothermal and hydroelectricity (Interview 3E, 2013). They

argue that there is no such thing as a “good energy” but rather their combination and

diversification is the key towards saving energy resources (Interview 2J, 2013).

State and private investors also support wind park developments given the large potential in the

country and the favorable business opportunities (Interviews 5D, 2013). Their claims have been

based mainly on efficiency mechanisms. First, they pointed out to technology competitiveness;

second, to their advantages for the overall energy system to complement hydro and displace

fossil fuels.

Concerning solar energy, private and state investors mentioned that off-grid applications at

smaller scales produce less socio-environmental impacts and are more flexible; however, they

generate disposable batteries that are avoided at on-grid larger scales (Interview 3L, 2013). At

the same time, automation increases on larger scales, hence creating less jobs (Interview 2H,

2013), while increasing competition with alternative land use (Interview 3H, 2013).

Nonetheless, opinions on the results of the first solar park (i.e. Miravalles) diverge among

actors. Most private investors and right-wing political parties have been critical on the lower

capacity of the pilot project and the high cost of installations (Interview 4G; Interview 1J,

2013). Project developers at the ICE acknowledged such limitations but also argue that it is not

located in the best site (Interview 3H, 2013), although its location is also strategic: “The Solar

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Park Miravalles became part of a renewable energy corridor of the Guanacaste province, the

only in the world within a 15 km radius” (Interview 3J, 2013).

Besides the solar park, located at the Miravalles Generation Center this corridor includes the

Miravalles geothermal production center, the wind park Guanacaste and the hydroelectric plant

Arenal. According to the solar park managers, the project has a demonstrative and educative

purpose. First, it allows to study the behavior of the technology on larger scales, and second to

attract numerous visitors from diverse population groups (e.g. students, politicians, national, and

foreigners) (Interview 3J, 2013).

8.3.3 Communication of Local Welfare

According to drivers of communication, electricity projects are reinforced because they are

appropriately and morally correct. On a local level, issues of sustainability play a major role and

the potential impacts of electricity production sources have major significance. Thus, the more a

technology reduces negative impacts at local level or is accepted by communities, the more it is

legitimized and reproduced in subsequent decisions. Otherwise, the cost of projects increases

since developers have to spend more time and money to build social acceptance to operate.

At earlier stages of electrification, similar to national welfare, the perception from hosting

communities of the ICE’s projects, being them hydroelectric dams and geothermal stations, was

very positive. This was related to the fact that the projects provided local welfare, especially to

rural or isolated communities, including communication infrastructure and jobs. These aspects

came up by interviewees at the ICE’s project units: “In the past, communities have such

favorable opinions regarding the institution that we were received like heroes…” (Interview 4C;

Interview 5Q, 2013).

Nevertheless, not everything was favorable back then, as one of the oldest and longest episodes

of confrontation on the construction of dams dates back to the 1970s, when the first attempt to

build the Boruca HP (1500 MW) was proposed by the ICE in combination with ALCOA.

However, heavy protests against these projects originated by local people convinced ALCOA to

pullout of the country (Carls & Haffar, 2007). The protests were originated by local people

opposed to the extractive activity by the company.

With liberalization reforms the proliferation of RORs gave way to community disputes.

Environmental and social concerns became a recurrent topic of grass-root and environmental

organizations, not only with respect to dams, but also with the smaller RORs. Moreover, people

from the local communities concerned about the negative impacts of hydroelectric plants gained

support from national and international organizations, researchers and activists. Their claims

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were echoed on a global level when the WCD launched the principles stating the strategic

priorities on dams’ development. These principles became a main guideline for networks of

environmentalists, grass-root organizations, and citizens nationally and abroad, including the

work of the Costa Rican Ecologist Federation (FECON). 164

Even though the objectives and priorities of the WCD were broadly accepted, their policy

recommendations and guidelines were less welcome by financial institutions and interest

groups, such as the World Bank itself and the International Commission on Large Dams

(ICOLD). An aspect of major controversy was the principle of indigenous prior consultation,

which “would mean that basically no dam could be built”.165

According to the principle, “all

countries should be guided by the concept of free, prior and informed consent, regardless of

whether it has already been enacted into law.” (WCD, 2000, p. 219).

In fact, the right of consultation was already stipulated in international conventions and

legislation ratified by Costa Rica. They include jurisprudence from the Organization of

American States (OAS), such as the Inter-American Court of Human Rights and the American

Convention on Human Rights ratified by Costa Rica in 1970.166

Likewise, the International

Labor Organization Convention (ILO Convention 169) ratified by Costa Rica in 1994 stipulates

the right of consultation (Sacchi, 2002; Carls & Haffar, 2010).

As contradictory as it may seem, in the same year the WCD principles were launched (i.e. 2000)

the ICE revived the Boruca dam proposal (i.e. 1500 MW) in spite of its history of controversy.

A conflict mediation process was extended in the following years. On a national level, the

projected was supported by the government, the Energy Planning Sector and the ICE on the

basis of national welfare to supply energy demand and local welfare for the communities

through the generation of employment and tourism potential (Sacchi, 2002).

On the local level, however, the Boruca HP in the Térraba River was also associated with severe

negative effects. Among them, Carls & Haffar (2010) remark the dam will flood approximately

25000 hectares, including parts of three indigenous reserves, as well as roads infrastructures in

another four reserves. The total population affected by the project was 6704, moreover it would

be necessary to relocate about 2500 indigenous people, flood areas containing archeological

vestiges, expropriate and provide payments for land and relocate communication routes.

164 The principles include gaining public acceptance; comprehensive options assessment; addressing

existing dams; sustaining rivers and livelihoods; recognizing entitlements and sharing benefits; ensuring

compliance; and sharing rivers for peace, development and security (WCD, 2000) 165

The Era of WCD belongs to the past. (2011-2012). Retrieved January 2014, from http://www.tcsr-

icold.com/Detail/49 166 “Ilegalidades del Proyecto Hidroeléctrico Diquís”, La Nación, 14.07.2011.; “El Diquís, frente a la

jurisprudencia de la Corte IDH”, La Nación, 01.11.2012.

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These impacts, together with effects on water, flora and fauna, especially in the Terraba-Sierpe

wetland (considered a wetland of international importance under the Ramsar Convention) not

only mobilized indigenous groups claiming their traditions and livelihoods with the land, but

also environmental organizations such as the FECON (Sacchi, 2005; Carls & Haffar, 2010). The

aspect that produced the greatest resistance to the Boruca dam was community displacement,

mainly groups belonging to the indigenous brunca - Rey Curré community, in addition to

environmental concerns (Sacchi, 2005).

Altogether, the lack of success or inappropriateness of the conflict management techniques used

by the ICE, thereby resulted in a decline of the WB and the IDB to finance the project in 2005.

In consequence, the ICE dropped the idea as originally planned and commenced a progressive

downscale towards smaller options. In 2006, the Diquís Dam Project (631 MW), was chosen by

the ICE as the hydroelectric alternative that considers the importance of the socio-environmental

impacts (Carls & Haffar, 2010).

The option of the Diquís HP dam will flood 6800 hectares 6800 hectares, less than a third part

of the Boruca HP option. Still, near 10% of the flooding area of the Diquís HP are indigenous

territories (610 hectares), but no indigenous population would be displaced (Carls & Haffar,

2010, p. 117). The impacts projected include near 1100 persons (no indigenous) relocated,

flood of archeological sites, as well as ecological implications to the Térraba-Sierpe wetland,

among other affectations in the river uses, road infrastructure and productive activities, but in a

lower magnitude than the Boruca HP.167

When the government declared the Diquís HP of “national convenience and public interest”, in

2008, this announcement was strongly opposed by environmental organizations, eco-lodges,

nearby communities and indigenous communities who claimed their right for consultation.

Since then, the Diquís HP conflict and mediation was underlined by an increasing national and

international pressure against the dam. Main concerns were grounded on the lack of prior

indigenous consultation, given the affectation of 10% of indigenous territories. The indigenous

people of Costa Rica demanded the protection of the ILO Convention 169.168

These conflictual processes have delayed the government approval of the Diquís HP. Project

developers at the ICE and private investors blame the government for the delay in the case of

the Diquís, as well as in other projects. According to them, slow progress of electricity projects

is due to the lack of clarity in the national energy policy and guidelines, as well as for not

attending the socioeconomic demands of the communities (Interview 1Q; Interview 5Q, 2013).

167 “El Diquís sustituye el gran proyecto Boruca” La Nación, 21.12.2008. 168 “Ilegalidades del Proyecto Hidroeléctrico Diquís”, La Nación, 14.07.2011.; “El Diquís, frente a la

jurisprudencia de la Corte IDH”, La Nación, 01.11.2012.

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In interviews during 2013, officials at environmental planning, economic engineering and other

planning departments at the ICE stated that they are guided by the highest standards (Interview

4L, 2013), thus could not understand the opposition from hosting communities, not only

towards the projects, but also towards the institute and its employees (Interview 5Q; Interview

4C, 2013). Interviewees repeatedly made reference to this change in attitudes compared to the

past and claim that compensations are never enough to affected populations: “The communities

want the ICE to solve all their problems even though this is the government’s job” (Interviews

1F, 2013).

In the period 2010-2014, legitimation problems continued affecting hydroelectric projects,

either large dams or smaller RORs. The concentration of several RORs in the same watershed

has been increasing the awareness among communities and based-root organizations concerned

about their environmental impacts and competing uses of water at local level (Municipalidad de

Buenos Aires, 2013; Municipalidad de Perez Zeledón, 2013). Consequently, in 2013 the two

municipal councils declared a moratorium to hydroelectric dams in their counties until there is a

planning proposal or a project to secure water provisions for human consumption.

Environmental organizations, such as FECON and Co-ecoceiba, have been using WCD reports

and other research from international networks (e.g. International Rivers) to support their

arguments and taking position on the side of affected communities. According to them “the

projects are imposed, therefore communities are reluctant” (Interview 2J, 2013). Environmental

organizations have a clear position regarding hydroelectric projects and have been advocating

for other alternative renewable sources, such as solar, biomass, wind and hydrogen.

Nevertheless, they do not have further commitments with one technology in specific.

On the other hand, conflictual processes from electricity projects at community level created

synergies between communal based groups with ecological concerns and environmental

organizations with distributive approaches that have been increasing over time. One example is

the organization of national forums since 2001, becoming a regular meeting point to exchange

experiences between communities from the North and South of the country (Interview 2J,

2013).

In summary, drivers from local welfare communication started to play a role in decisions of

electricity investors since early stages. Is at the project site where the hosting communities are

directly affected by social and ecological impacts, affecting their livelihoods positively or

negatively. This is exemplified by the reversal and slowdown on decisions of several RORs and

new dams that raised awareness from environmentalist and grass-root organizations from a local

sustainability perspective.

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Since the 1990s, hydroelectricity legitimation suffered intensively what path dependency theory

outlines as (degenerating) side effects from decisions. In fact, local welfare communication

started reversing self-reinforcing mechanisms of hydroelectricity legitimation based on national

welfare communication and of hydroelectricity efficiency based on scale economies.

Meanwhile, from the perspective of the government, the Energy Planning Sector and the

multilateral financing organizations, hydroelectricity remained a legitimate source to satisfy

growing electricity demands and reduce poverty. These contradictory perspectives are also

explained in the section on political power mechanisms.


Drivers from legitimation mechanisms discussed above (i.e. global climate change, national and

local welfare communication) had a great transformative potential for the national energy

system. However, in the first decades of the 21st century their effect was rather ambiguous. The

communication of national and local welfare influenced decision-making process that reinforced

the hydroelectricity path since early stages. However, degenerating side effects were dawdling

or even reversing them, in particular from local benefit communication.

Alternatively, I discovered that legitimation mechanisms of actions against global climate

change did not have a role as a driver of decisions from the perspective of legitimation

mechanisms. The communication of actions against global climate change was present in

several strategic documents from the Energy Planning Sector (e.g. National Strategy on Climate

Change and Carbon Neutral initiative). However, the legitimation of this criterion played little

role in energy decisions of the ICE and private investors. Conversely, the effectiveness of

hydroelectricity as adaptation strategy is highly relevant in the eyes of the ICE and the Energy

Planning Sector, but this aspect is closely linked to reliable electricity effects.

This finding further supports the idea of Fletcher’s (2010) which showed that the resurgence on

dam construction worldwide is underway, substantially spurred by the climate change discourse.

This occurred as the government took further steps positioning the country internationally as a

carbon neutral nation, but mostly as consequence of ‘periodical adverse climatological

conditions’. Nevertheless, the findings of the current study goes further suggesting that the

drivers of such discourses in the case of Costa Rica were based on efficiency claims, rather than

legitimation of these measures against global climate change.

Since early stages, national welfare communication played a major role in energy decisions and

for the legitimation of hydroelectricity projects. These drivers also have positive repercussions

on the ICE’s special standing in the society. From the perspective of the government, the

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Energy Planning Sector and the multilateral financing organizations, hydroelectricity remained

a legitimate source to satisfy growing electricity demands and reduce poverty. Other alternative

renewable sources, except geothermal energy, lack such drivers on larger scales.

Although in the early 2000s, international organizations showed a precautionary viewpoint

towards financing dams, a new wave of support towards dam construction resurged by the end

of the 2000s decade. Domestically, the impulses were driven by increasing electricity prices, an

issue that started to dominate the public debate supported by the media. On the global realm,

global discourses reinforced dams’ continuation by providing material and ideological resources

from national welfare communication.

With the publication of the WDC principles, in 2000, contentions increased for the construction

of dams. Dams were ascribed with large environmental impacts, besides important social and

cultural repercussions. Conversely, in the case of RORs, the aspect of environmental

sustainability was highlighted as one advantage of these smaller hydroelectric plants.

Nevertheless, over time dams continue upholding an important level of legitimation among

actors in the energy system, but not RORs. Even environmentalists consider dams as an option

to global climate change, if they are built properly and guarantee fair compensation to displaced

communities. Meanwhile several RORs face problems of legitimation, not only from the

perspective of environmentalist and hosting communities, but also losing support in

communications from the Energy Planning Sector and some international hydroelectric

advocacy groups.

Drivers from local welfare communication play a critical role in decisions of electricity

investors, especially the ICE, regarded among the population as having great deal of legitimacy.

Is at the project site where the hosting communities are directly affected by social and

ecological impacts, affecting their livelihoods positively or negatively. In the period under

review, there were indications of legitimation problems from local welfare communication.

Concerning geothermal energy, different actors consider this source appropriate as an

alternative to hydroelectricity. Firstly, geothermal energy is low carbon; secondly, it also avoids

the problems surrounding hydroelectricity generation (e.g. local opposition and/or ecological

impacts), and thirdly, it provides the same advantages of ‘firm’ electricity. Environmentalists’

position tend to favor this source, on a larger scale, before dams, but their claim is not in terms

of national socioeconomic benefits provided by dams or geothermal plants, but rather is in terms

of global climate change legitimation.

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Part III Integrated Discussion and Concluding Remarks

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9 Path Dependency and Path Breaking in the Costa Rican Energy System

towards Carbon Neutrality 2021

9.1 Introduction

The present chapter provides an integrated discussion of the findings from the dissertation. The

main result of the analyses confirms that Costa Rica’s energy system developed a path

dependency in the electricity sector that reinforces hydroelectricity development through

decisions that are beyond individual cost-benefit assessments made by long-standing sector

institutions. The drivers of these decisions evolved in all three mechanisms of efficiency,

political power and legitimation. The same factors that reproduce the preeminence of

hydroelectricity installations, restrain the subsequent ability of the national energy system to

further implement policies that incorporate solar energy and other alternative renewable sources.

The technology selection in the country is largely influenced by centralized decisions made in

the past and reinforced over time by politicians, the ICE, as well as the energy planning sector.

I distinguished 10 drivers of decisions and one external shock to explain technological and

institutional developments in Costa Rica’s energy system (see Figure 10). On one hand, eight

drivers produce a path dependence which reinforces hydroelectricity at systemic and individual

levels.

At systemic efficiency level operated a) drivers of global climate change effects, b) drivers of

reliable electricity effects and c) drivers of national welfare effects; at individual efficiency level

d) coordination effects, e) learning effects and f) scale economies. Those drivers were also

enhanced by g) drivers of empowerment of private actors; and h) the communication of national

welfare, from political power and legitimation accounts, respectively.

Then again, there are three drivers of path breaking by which patterns marked by path

dependency might be reversed, they are: i) the communication of local welfare from

legitimation mechanisms; ii) community empowerment from political power struggles; and iii)

uncertainty over efficiency effects from exogenous climatic shocks on hydroelectricity projects

that will complicate things for hydroelectricity, eventually reversing efficiency mechanisms of

scale economies and reliable electricity effects from these installations.

Accordingly, this chapter addresses those mechanisms in separated sections, one for the

elements of path dependency and the other for the elements of path breaking. Furthermore, after

this introduction an additional section is added for an integrated discussion on the level of

analysis, actor interactions and scenarios of carbon neutrality. The last section sums up some

final considerations and concluding remarks.

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9.2 Level of Analysis, Actors Interactions and Scenarios of Carbon Neutrality

Starting with the level of analyses, particularly in the case of efficiency mechanisms, there is

distinction between individual accounts and systemic accounts as drivers of decisions. It was

found that individual decisions, motivated by scale economies, learning and coordination

effects, are at the same time connected to systemic drivers of economic growth, reliable

electricity effects and global climate change effects that refer to the overall system (i.e. systemic

accounts).

In the cases of legitimation and political power mechanisms, their effects concern the overall

energy system. For instance, the systemic accounts from legitimation are linked to drivers from

the communication of national welfare, local welfare and global warming effects that refer to

larger scale processes. Similarly political power mechanisms consist of drivers of empowerment

of private actors and community empowerment in reference to the electricity model or the

energy system as a whole.

Therefore, systemic accounts from efficiency, legitimation and political power are classical

mechanisms producing path dependency because they are beyond actors’ individual decisions.

Although they are also connected to individual accounts on projects and decisions, it was found

that systemic accounts played a major role explaining the lack of dynamism of the electricity

sector in Costa Rica. Thus path dependency discussions have a focus on drivers at the systemic

level.

In addition, some differences were found in the mechanisms emphasis among actors and over

time. For instance, powerful state actors put more attention on efficiency mechanisms at the

systemic level (e.g. reliable electricity effects). Meanwhile, among secondary actors and

institutional entrepreneurs, such as private investors, civil society organizations and the

influence of international organizations (and the global industry) drivers of efficiency at

individual level play a major role (e.g. coordination effects).

In this regard, I found that in the case of Costa Rica’s energy system drivers of efficiency

mechanisms at individual level are key to incentivize interest on technologies at initial stages.

These drivers were relevant, for example in the emergence of wind energy in the 1990s.

Meanwhile, other systemic drivers more clearly operate in later stages of path dependency.

In terms of actor constellations and their interactions, by the end of the period three

constellations of actors can be distinguished in the analyses of mechanisms. The first are

decision makers or actors making choices on projects and energy policies, they include: state

and private investors, the Energy Planning Sector and politicians. A secondary group of actors

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that are directly influencing decisions are civil society organizations, public and private

associations (and related clusters), the media and international organizations. The third

constellation is indirectly influencing energy decisions, they are local communities and the

general public who elect and pay for governments.

Historically, state empowerment during the ‘developmental state era’ favored the ICE’s

autonomy, which enjoyed good reputation from politicians and the general public. Therefore the

institute emerged from this period as a new political actor. After liberalization reforms, the actor

constellations changed and new renewable energy sources were incorporated to the national

energy mix.

By the year 1997, the actors involved in different stages of the electricity service included four

cooperatives, two municipal companies, as well as over 20 private investors that owned

additional installations (Battocletti, 1999). After liberalization reforms, the interest of private

investors in the electricity sector increased as long as their installations grew in number and size

(e.g. until permitted limits). The relative political importance between state and private actors is

changing over time, but in general terms the institutional arrangements established in the

electricity sector tend to emphasize their cooperative interrelation.

Table 8. Actors’ interests and logics of decision


Period Relevant Actors Involved Interest in Technologies Logic of Decisions

(Systemic)

Before 1990 Powerful state actors: ICE, politicians

Other decision makers: Private

construction contractors, experts and

consultants (national and international); Rural electricity providers

Secondary actors: Worker unions

Hydroelectric dams

Social and economic development

Efficiency: reliable electricity

effects, national benefit effectsPolitical power: state

empowerment

Legitimation: national and local benefit communication

1990-2014 Powerful state actors: ICE, the Ministry of

Environment, politicians and regulatory bodies

Other decision makers: Private and other state electricity producers; international

shareholders; Private Energy Producers Association (ACOPE); Costa Rican

Association of Solar Energy (ACES)

Secondary actors: Worker unions,

environmental organizations and other civil society organizations

Hydroelectric dams and RORs;

geothermal fields; Solar Home Systems (SHS); first wind parks;

biomass stations; small private solar

installations

Socio-environmental concerns

Efficiency: global climate change

effects; reliable electricity effects, national benefit effects

Political power: empowerment

of private investorsLegitimation: national and local

benefit communication

2014-towards 2021 Powerful state actors: ICE, the Ministry of

Environment, politicians and regulatorybodies

Other decision makers: Private and other state electricity producers; ACOPE;

international shareholders; the Costa Rican Solar Energy Association (ACESOLAR)

Secondary actors: Environmental and civil society organizations; international

organizations; local municipal councils

Hydroelectric dams and RORs (e.g.

Diquís dam, Reventazón HP); geothermal fields; Distributed

Electricity Generation; first Solar

Park Miravalles; natural gas prospects

Socio-environmental concerns

Efficiency: global climate change

effects; reliable electricity effects, national benefit effects

Political power: empowerment

of private investors; community empowerment

Legitimation: national and local benefit communication

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In addition, differences in power relations between actors also influence decisions that result in

the preeminence of choices from the most powerful actors. Key players in each framework are

mostly the ICE, the Energy Planning Sector and politicians. However, their interactions with

other actors also frame the selection of projects, though, their interrelation varies to some extent

in each framework.

In the efficiency framework most powerful actors are decision-makers who are the state and

private investors making choices about energy projects and technologies, as well as the policy-

makers stating priorities among them. Institutional entrepreneurs among secondary actors are

mainly private investors. In the political power framework, the powerful actors are the Energy

Planning Sector, the ICE and politicians, where the influence of private investors is evidenced.

Among subordinated/secondary actors, those who can tip the balance changing the power game

in the energy system are civil society organizations and local governments with the support of

international networks (i.e. environmental organizations and indigenous rights).

In the legitimation framework most relevant actors are those who set the norms and have the

capacity to rule the energy system. They are basically the Energy Planning Sector, the ICE and

the politicians. While those who consensually or antagonistically follow the rule setting are,

besides state and private investors, the local communities and the general public. Institutional

entrepreneurs among secondary actors are environmental organizations, community based

organizations and the influence of international organizations with capacity to tip the balance (in

terms of legitimacy) of the ruling elite.

In terms of renewable energy sources in the country, geothermal stations, wind parks and

biomass stations, started to operate as a complement to hydroelectric plants. Private electricity

generation focused on hydroelectricity and wind energy on smaller scales, while the ICE

concentrated on the development of larger hydroelectric projects and geothermal fields. Already

in the early 2000s, hydroelectric projects were using 50% of the country’s 34 major watersheds

(Lindo, 2006). Table 8 illustrates actors’ interest and logics of decision in different periods of

time.

Concerning scenarios towards carbon neutrality in the year 2021, the interests of powerful state

actors on technologies are reflected in the Electricity Expansion Plan (2014-2034). This plan

includes the projects that are currently being executed and the recommended ones (ICE, 2014,

p. 107). In short, an overview on those perspectives show the same trend followed in the past

years.

Among the recommended projects, three different projections or “routes of expansion” are the

most relevant. The Route 0 or base scenario progressively incorporates abundant small and

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medium size renewable energy projects (generic) with high variability (e.g. wind energy and

run-of-the river stations). Then, Route 1, which is the recommended one by the ICE and the

Energy Planning Sector, is based on the development of the Diquís hydroelectric dam. The

Route 2 introduces liquefied natural gas (LNG) in future projections.

In these analyses, the projected electricity demand in 2035 is not varying much between the

low, the medium-level and the high demand scenario (i.e. projected 3.3%, 3.4% and 3.6%

annual growth in 2035 respectively). Likewise, the estimated present cost (i.e. including the

environmental criteria) of the different routes is very similar (ICE, 2014, p. 92). For instance,

the medium-level demand scenario used in the Route 1 has an estimated present value of 4081

million dollars; this is reduced to 4078 million dollars in the Route 0 and to 4043 million dollars

in the Route 2 (MINAE, 2010; ICE, 2014).

In the future, a potential reduction from hydroelectricity in national energy projections would

make it difficult to achieve carbon neutrality by the year 2021. In this scenario, the role of

alternative renewable sources, is and becomes relevant. Nevertheless, it also directs attention

towards non-conventional fossil fuels like natural gas. Consequently, the aspects that might

inform decisions for future scenarios in the national energy transition are in the end more

political rather than just technical.

9.3 Elements of Path Dependency

This section integrates the analyses of factors producing path dependency or lock-in of

hydroelectricity in Costa Rica’s electricity sector towards carbon neutrality. According to

scenarios projected by the ICE towards 2034 (i.e. route 0 abundant small-medium size, route 1

Diquís dam and Route 2 natural gas) the estimated cost and projected demand is not varying

much among them. Therefore, what are the criteria for decisions in the electricity sector that

cause a path dependency on hydroelectricity? In this section it is argued that systemic efficiency

mechanisms played a major role from the point of view of decision makers. In addition, two

more drivers of decisions from political power and legitimation mechanisms trigger status in the

system.

Above all drivers, reliable electricity effects from efficiency mechanisms prevail in decisions of

the ICE and the Energy Planning Sector explaining path dependency in the Costa Rican case.

Choices based on the reliability of the different energy sources were also supported by impulses

of economic growth and global climate change effects. The results indicate that these efficiency

mechanisms motivate the selection of technologies that favor hydroelectricity and geothermal

energy characteristics.

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Furthermore, the current study found that policies and projects launched by these actors with the

support from political elites were also motivated by the empowerment of private actors and the

communication of national welfare. Altogether, those mechanisms help to explain not only the

reinforcement of hydroelectricity, but also the advance in geothermal developments as a second

best option. Partly, they also explain a slowdown of investments in alternative renewable

energy.

9.3.1 Path Dependency from Efficiency Mechanisms

The present study found that systemic accounts from efficiency based on drivers of economic

growth, reliable electricity effects and global climate change effects are closely interlinked.

These logics of decisions are predominant in the perspective of the ICE, the Energy Planning

Sector and the politicians who have the political power to implement institutional change.

Therefore, they provide explanations on path dependency of hydroelectric dams and RORs.

The recommended route of expansion (2014-2034) foresees the incorporation of two large

hydroelectric plants (i.e. Reventazón HP, 292 MW and Diquís HP, 650 MW) that will

commence operation in 2016 and 2025. Since the announcement of carbon neutrality, the

Energy Planning Sector and the ICE discuss climate change with a focus on systemic efficiency

accounts. For instance, the National Strategy for Climate Change (2009) considered that

mitigation and adaptation options should not only be based on an improvement on energy

efficiency but also on “water efficiency” (i.e. eficiencia hídrica), as water is the main source of

clean energy.

In the mitigation strategy, it is estimated that the country uses 63% of the water resources to

produce electricity, fulfilling over 95% of the national electricity consumption. Hence, from the

standpoint of the Ministry of Environment hydroelectricity has an indirect but fundamental role

within the mitigation strategy of the country and the energy system.

“Clean energy production is one of the major benefits that we make to the mitigation of

GHG emissions on a global level, since it is amply demonstrated that electricity

production from fossil fuels is the activity that accounts for the larger concentration of

CO2 emissions worldwide” (MINAE, 2009, p. 51).

Private investors also reinforce drivers of global climate change effects through decisions, at

individual levels, driven by coordination effects from carbon mitigation instruments. For

instance, through the PES, state and private investors as well as global environmental

organizations involved in carbon mitigation projects (e.g. The Nature Conservancy) finance

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conservation efforts on watersheds (Lindo, 2006; Fletcher, 2010). Following profit motivations

such incentives reinforce the reproduction of hydroelectric plants.

In terms of adaptation, the implications of climate change over water resources are seen in terms

of system’s efficiency driven by reliable electricity effects. The National Strategy for Climate

change also argues for a more efficient administration of the country’s water supply, among

watersheds and the protection of water sources (MINAE, 2009). Dams have advantages in terms

of reliable electricity production and carbon mitigation strategies because they possess a water

reservoir.

On the contrary, it is precisely the aspect of reliability that relegates alternative renewable

sources to a subsidiary position. With the exception of geothermal, the potential of alternative

renewable sources is disregarded under similar arguments of reliability. In interviews during

2014, officials at planning departments drew attention to the advantages of geothermal energy in

terms of reliability: “(Geothermal energy) renders wonderful results, provides energy all the

year and it’s of the best quality” (Interview 2P, 2014).

The Route 0 or base scenario progressively incorporates generic renewable energy projects with

high variability (e.g. wind energy and run-of-the river stations). The case of run-of-the river

stations (RORs) is different because in spite of its variability and reduced production in summer

RORs are seen as a relevant back-up source. From the perspective of the ICE the high

variability of production and the lack of storage capacity are main drawbacks from these

renewable projects: “Possibly this route will suffer a deficit of storage and regulation capacity

that has to be corrected through additional investments that are not addressed in the present

analysis” (ICE, 2014, p. 92).

During interviews this limitation was also highlighted, including the estimations of an upper

bound or “technical preventive measure” of installed capacity for the cases of wind and solar

energy installations. Wind energy was considered a very good complement to hydroelectricity,

however unlike geothermal, it’s highly variable and needs back-up (i.e. hydroelectricity dam or

fossil-fueled plants) during periods of low production. As pointed out by interviewee at the ICE:

“If 300 MW of wind energy are installed, where is the back-up? Then we need to build

a 100MW hydroelectric plant or (oil) thermal station. (…); the expansion must consider

that there is a technical preventive measure to no more than 350 MW” (Interview 2P,

2014).

Solar energy remains largely underrepresented within expansion plans with less than 2 MW of

installed capacity. In the expansion plan the ICE acknowledges decreases in technology costs

and lower socio-environmental complexities as compared to other technologies (ICE, 2014, p.

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40). Nevertheless, besides problems on reliability effects of solar energy, perceptions of higher

costs and low generation potential of this technology still persist among the Energy Planning

Sector and the ICE’s planning departments (Interview 4N, Interview 4E; Interview 5E, 2013).

“The variability is more accentuated in the case of solar energy than wind energy,

though increasing their use will also require more run-of-the river stations in different

areas of the country and more hydroelectric dams. (…) In the case of solar energy there

is a limitation given a technical preventive measure to no more than 5 MW installed

capacity” (Interview 2P, 2014).

In fact, continuity of supply is the ICE’s major concern. Planning departments at the ICE have

the strategy to opt for a national energy renewable mix and with diverse energy sources. These

diverse sources, including fossil fuels, are arranged according to the variation of dams as back-

up. When the situation is critical, fossil-fueled plants are rented or traded in the Central

American Electricity Market: “Plants with a dam are operated with forecast or prediction. It

could be the case that it is raining but still we are burning fossil fuels to recover the reservoirs.”

(Interview 2P, 2014)

The route of expansion 2 elaborates on projections regarding possible scenarios of natural gas,

which contribution is foreseen in 2025 (ICE, 2014). In the eyes of the ICE’s planning

departments, given the mandated for the provision el electricity, it is not viable to disregard the

alternative of conventional and nonconventional fossil fuel sources: “We do not see viable to

disregard oil fueled plants, for example Garabito, 200MW (...), and concerning natural gas, at

the moment the options are to import natural gas from the United States” (Interview 2P, 2014).

Natural gas is considered by the Ministry of Environment and the Energy Planning Sector as an

“alternative to other more expensive fossil fuels, given the growing energy demand and the

climbing electricity prices in the country” (Interview 5E, 2013). In this sense, politicians on a

national level have been following the arguments of the natural gas industry as a transition

towards carbon neutrality.169

However, this perspective is problematic from different points of

view.

From an efficiency point of view, interviews with experts and officials at planning departments

make reference to the consumption of natural gas in Latin America as very low in comparison to

Asia. For this reason, the national refinery (i.e. RECOPE) has to be involved in the deal for

Costa Rica to start-up the industry for electricity generation (Interview 2P, 2014). Moreover, as

169 In his book, Hefner (2009) makes the case that natural gas is the essential bridge fuel to renewable

energy sources. These issues were discussed at the 2nd Annual Forum on Prospects for LNG and Natural

Gas in Central America, San José 02.10.2013

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long as the natural gas is imported like in the case of conventional fossil fuels, there is a risk

that energy cannot be imported in the moment needed.

From an environmental point of view, the production of natural gas and the fracking technique

to extract the resource prompted environmental and health concerns in the United Sates and

other countries.170

Besides, the natural gas scenario also contradicts the environmental policy of

carbon neutrality. International energy agencies refer to the natural gas risk of moving away

from low carbon targets.

“The negative effect takes place by artificially depressing electricity cost producing

lower returns and also by competing for new infrastructure, given natural gas capital

intensity” (Deloitte, 2013).

The effect of a lower price of natural gas creates the possibility of reducing electricity costs,

with the risk of displacing alternative renewable energies (Deloitte, 2013; IEA, 2012). The

rising use of natural gas, in cases like Brazil and Colombia, is also triggered in reaction to

dependency on hydroelectricity, which has been vulnerable to changing weather patterns

(Tissot, 2012).

Systemic accounts of efficiency make reference to energy as a critical factor for economic

growth. In documents and discourses this aspect is constantly mentioned usually linked to

economic competitiveness. From this particular perspective, dams have a great potential and are

adequate to achieve the goals of national socio-economic development and carbon neutrality.

However, more than an aspect of efficiency, the communication of national welfare, including

economic growth and poverty reduction, seems more closely connected to legitimation

mechanisms and the communication of national welfare. First, electricity demand growth is

expected to remain rather low. Second, the production of dams like the Diquís HP would

significantly increase installed capacity, and thus it is expected to be sold in the regional market.

These aspects are further developed in the legitimation section.

In summary, the results of the historical analysis show that the drivers of global climate change

and reliable electricity effects reinforce dams’ preeminence over time. Moreover, the systemic

accounts were also triggered by individual accounts based on drivers of coordination effects

through incentives that promoted carbon mitigation. These effects continue reinforcing

hydroelectricity in the route towards carbon neutrality.

In most cases, references to global climate change effects alluded to efficiency mechanisms and

to the advantages of hydroelectricity in terms of adaptation and survival of the overall energy

170 “What is fracking and why is it controversial?”, BBC News 27.06.2013.

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system. Drivers of economic growth also reinforce hydroelectricity because it increases

competitiveness, energy efficiency and lower electricity bills from a low carbon energy source,

but the logics of these mechanisms appear more as a powerful legitimation argument.

Alternative renewable sources including RORs, wind parks and solar energy are highly variable

and lack storage capacity. Among them, RORs still enjoy the confidence of the ICE and the

Energy Planning Sector that used them to back-up dams, displacing fossil fuels. Lastly, the

evidence provided suggests that although the natural gas scenario has support among politicians,

its advantages are questioned inside planning departments at the ICE and other experts. In terms

of efficiency, in the country this technology lacks drivers of scale economies that are important

to develop capital intensive industries. Moreover, the use of natural gas in electricity production

challenges carbon neutrality from a systemic perspective, besides other environmental concerns

that difficult its feasibility in the country.

9.3.2 Path Dependency from Political Power Mechanisms

The current study found that in terms of political power relations the empowerment of private

actors reinforced the same energy pattern driving hydroelectricity to a stage of path dependency.

Private investors, some of whom lead investments in alternative renewable sources in the 1990s,

favored the predominance of hydroelectricity projects in their initial choices, aided by power

relations. Nonetheless, at present private investors are seen by state and private actors as

potential relevant actors to propel solar energy developments and biomass electricity stations in

the future.

Besides profit motivations from incentives (i.e. market regulations and carbon mitigation) at

individual levels, political issues of structural relations of power also played a role driving

private and state investors’ decisions. Since liberalization reforms the empowerment of private

investors was facilitated by existing environmental and market regulations. These processes also

created vested interests in the electricity sector where the state apparatus was used by some

politicians with private businesses in electricity production. Left-wing parties, environmental

organizations and universities identified these “blows” against the ICE and public financing

following the 1990s reforms of the sector, as referred in chapter 7 (p.11).

During the last two governments (2006-2010 and 2010-2014), the electricity agenda was based

on the promotion of private investments in renewable energy. This agenda foresees the

expansion of hydroelectricity projects, while environmental aspects and latent problems with

local communities remained out of the political discussion. That became clear in the texts of the

bill proposals promoted during these administrations (see chapter 7, p.31-33).

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As an example, the only conflicts foreseen in the laws were between electricity companies and

grid operators or between projects, which will be solved by the Ministry of Environment based

on the National Energy Plan (File 17666, 2010; File 17812, Article 98, 2010). In particular,

none of these laws made reference to water concessions that confront communities and private

interests.

Vested interests present in electricity have been influencing decisions. More recently business

groups in the sector financed political campaigns and lobbied to open up the sector or increase

their share in the market. Still, they are not considered powerful enough to tip the balance in

political decisions, as pointed out by interviewee: “(…) the situation will not change, unless

more powerful regional actors make pressure tipping the balance towards more private

participation in the national market” (Interview 1G, 2013).

Concerning conflictual power relations, the problem arises when the interest of private or state

investors reach the level of political energy decisions against public interests. This occurred in

the case of several private hydroelectricity investments, but also in cases of the ICE

investments. For instance, powerful groups with interest on the Diquís dam, including the ICE,

the Energy Planning Sector, politicians and global environmental organizations eager to take

advantage of the benefits from the PES, exerted influence through the state to announce the

declaration of public interest and national convenience for the project, in spite of pending legal

aspects.171

In fact, feasibility studies and road infrastructures were advanced and the

environmental organizations already started the promotion of “water funds”, an innovative form

of the PES to finance conservation efforts on watersheds feeding the future Diquís reservoir

(Fletcher, 2010).

Most sensitive aspect on the dam is the lack of consultation with indigenous groups, given

affectation on their territories. Nevertheless, compared to the Boruca HP, the social and

environmental effects of the Diquís HP are downsized, as well as the social mobilization (e.g.

environmental organizations and community-based organizations) against it (Fletcher, 2010).

Claims of the ICE, the Energy Planning Sector and politicians who defend the Diquís HP would

have stronger resonance on final decisions if adequate deliberation would take place.

In addition, the trend towards market and the corporatization of the ICE changed institutional

emphasis on efficiency goals (i.e. economic competitiveness) above other national welfare. In

this context, being “profitable” became part of the Institute’s values.172

Likewise, the ICE got

171 “El Diquís, frente a la jurisprudencia de la Corte IDH”, La Nación, 01.11.2012. 172 Misión - Visión - Valores - Grupo ICE. (2015, March, 15). Retrieved June, 2015, from

https://www.grupoice.com/wps/portal/acercaDe

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adapted to the rules of the game in competition with private investors, domestically and abroad

through the Central American Electricity Market.

Although further advances of the neoliberal agenda in the electricity sector found resistance in

the country in the early 2000s, the trend towards market and international competitiveness of the

sector continued unchallenged until 2014. With the incoming center-left government taking

power, it is probable that there will be some reluctance by the new government to go deeply into

liberalization and market reforms, while favoring a move towards citizens’ participation.

However, a change to turn in the national developmental growth strategy based on large dams is

less likely to happen.

To sum up, liberalization reforms empowered private investors in the national energy system

with an initial effect that reinforced the hydroelectric path through power relations. At the same

time, the trend towards market and the corporatization of the ICE produced a gap of policy

outcome (i.e. path dependency) in terms of sustainable energy transformation. As a result,

efficiency goals of economic competitiveness were above local people’s wellbeing. These

processes reinforced hydroelectric projects, but also antagonism between actors.

9.3.3 Path Dependency Elements from Legitimation Mechanisms

Legitimation mechanisms are analyzed according to drivers of global climate change

communication, national welfare communication and local welfare communication. The

evidence analyzed in chapter 8 shows that the communication of national welfare really plays a

role in the path dependency of hydroelectric dams, while the communication of local welfare do

so for path breaking. Contrary to expectations, legitimation actions against global climate

change were not so relevant in decisions between energy sources.

Social acceptance of electricity projects varies among different actors as well as over time. At

the end of the 1990-2014 period, actors with the capacity to change norms, such as the ICE, the

Energy Planning Sector and politicians tend to support hydroelectricity projects in general, and

dams in particular. Dams have high legitimation within this group mainly due to the

communication of national welfare, including the ICE’s national mandate for the provision of

electricity.

Although global climate change was constantly present in communications from the Ministry

and politicians, it was not the case in the selection of projects. In interviews during 2013,

planning departments at the ICE challenged the concept of climate change due to lack of

sufficient data. Likewise, in the Electricity Expansion Plan (2014-2034) the ICE acknowledges

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that the national renewable hydro-based energy model is vulnerable to climate change, but the

effects are somehow downsized and able to be modeled.

“Nevertheless, everything seems to indicate that in the time horizon of the (electricity)

expansion plan, the changes on climate variations will be modest, therefore, it is

acceptable to model hydro meteorological events as cyclostationary process” (ICE,

2014, p. 64).

Furthermore, the concept of climate change is not intrinsically integrated in the institutional

vision of the ICE, whereas concepts of economic development and social welfare are rooted in

the Institute’s history and present in the organizational values. This is evidenced in the mission

and vision of the ICE, as well as in the values agreed by the Managing Board in 2014.

“Group ICE Mission: We are the Corporation property of the Costa Ricans that offers

electricity solutions and telecommunications, contributing to economic, social and

environmental development of the country. Group ICE Vision: Being a leading

Corporation, innovating in the business of electricity and telecommunications in

convergence, focused on the client, profitable, efficient, promoter of development and

national welfare, with international presence.”

During the political campaign in 2013, claims from the Energy Planning Sector, the ICE, and

politicians in support of the Diquís dam alluded to the advantages of the dam in such terms. In a

context of increasing electricity tariffs, presidential candidate J. Araya, referred to the Diquís

dam with the following statement “the main enemy of communities is poverty”.173

From their

perspective, hydroelectric projects have a great potential and are adequate to achieve the goals

of national economic development, poverty reduction, and carbon neutrality by the year 2021.

Even the National Strategy for Climate Change (2009) reinforces the support of the larger

hydroelectric plants scenario, since besides clean, “their production results are cheaper to the

country, reliable and more environmentally sustainable than other sources” (MINAE, 2009, p.

52). In the same strategy, the Energy Planning Sector suggested actions to approach conditions

creating delay on investments and insufficient diversification of energy sources. Failure in

approaching these problems would have negative consequences to the energy system which are

framed in terms of national welfare.

173 These issues were discussed at the National Forum on Clean Energy "Jorge Manuel Dengo", San José,

02.09.2013. However, the way tariffs are set by the ICE, the poorest households have subsidized tariffs.

Increases have been afforded by the residential and the industry sector (note: include figures and

references).

199

“If these conditions are not considered, the country could affront severe consequences

such as reductions in security of energy supply, increases of electricity/or fossil fuel

imports, which not only increase CO2 emissions but also rising oil bills with the

corresponding increasing trend on electricity tariffs for consumers and, as a main result,

a notably reduction in the quality of life of the Costa Ricans” (MINAE, 2009, p. 62).

In the case of alternative renewable sources and legitimation mechanisms, the communication

of actions against global climate change has not prompted any deviation from the hydroelectric

pathway, neither have the communication of national or local welfare triggered them. The

Energy Policy (2010) remarks that in official projections towards reaching carbon neutrality,

hydroelectricity will remain dominant until its limited potential are reached by the year 2033. At

this point, the era of “technological revolution with new energy sources” will begin (MINAE,

2010).

Decisions of the ICE to initiate developments of wind parks and geothermal projects in the

1990s period were supported by the institute’s belief that it was the right thing to do to

complement hydroelectricity. However, this claim was not related to appropriateness or moral

reasons, rather system’s efficiency (i.e. drivers of reliable electricity effects). Similar

motivations towards alternative renewable energy were found in 2013-2014 during interviews

of planning departments at the ICE.

According to interviewees from planning departments at the ICE, geothermal energy was

ranked first, followed by hydroelectricity. Biogas grid-connected was third, which also provides

stable electricity (i.e. with a load factor close to 1). Wind and solar energy were ranked fourth

because they are dependent on the site where the resources are available (Interview 2P, 2014).

While the potential from all of them, including oil sources, have to be combined, fulfilling the

ICE’s mandate: “The institute has a national mandate for the provision of electric energy (…).

We also depend on the sources to look after the dams” (Interview 2P, 2014)

The preferences among sources from other groups of actors were not different from those of the

ICE, even from environmental organizations. Although in the case of environmentalists the

communication of global climate change plays a role in choices. From the perspective of actors

setting the rules in the energy system all alternative renewable sources are low carbon as well.

Therefore, legitimation of actions against global climate change did not explain the choices

among alternatives. Thus, preferences on hydroelectricity and geothermal energy are linked to

their higher reliable electricity effects in terms of efficiency.

Contrarily, the communication of local welfare from hydroelectricity suffers from legitimation

problems. Politicians acknowledge this, in their interviews by stating that large dams are a

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priority, but delays in projects caused by social resistance place geothermal stations as a second

best option (Interview 1J, 2013). State and private investors increased the interest on geothermal

energy, inside or outside natural protected areas, partly resulting in these limits to

hydroelectricity.

Besides the Diquís dam, several RORs and even geothermal installations, in natural protected

areas, raised criticism from environmental organizations together with organized communities,

indigenous groups and global networks. In relation to that, the contradictions between the ICE’s

institutional mandate for the provision of electricity and issued laws that restrict electricity

developments in indigenous territories and natural protected areas is a tension towards path

breaking.

Therefore claims of the Energy Planning Sector, the ICE, and politicians who defend the Diquís

HP allude to broader national welfare and the system’s efficiency. The communication of

national welfare, including economic competitiveness and poverty reduction, appears as a

powerful legitimation argument reinforcing dams. Meanwhile, the results of the historical

analyses show that in the 1990-2014 period, global climate change legitimation did not

reinforce nor questioned hydroelectricity preeminence over time.

Furthermore, the advantages ascribed to hydroelectricity in terms of the communication of

national welfare contribute to the subsidiary role of alternative renewable sources. In this

regard, choices of the ICE coincide with those of politicians and even with some

environmentalists’ position. However, the antagonism between actors’ position is evidenced at

the local level, where aspects of path breaking are linked to political power relations approached

in the following sections.

9.4 Elements of Path Breaking

The result of this study indicates that the elements of path breaking are associated to

endogenous factors of legitimation and political power mechanisms. Contingently, efficiency

mechanisms could also change the energy trajectory as result of an exogenous shock reversing

self-reinforcing mechanism from efficiency. Throughout all these drivers of path breaking

patterns marked by path dependency on hydroelectricity might be reversed.

Elements of path breaking from efficiency are originated from exogenous effects of climatic

variability increasing hydroelectricity vulnerability (i.e. reversing drivers of reliable electricity

effects and scale economies). Meanwhile, endogenous elements of path breaking are originated

from reversing drivers of local benefit communication also triggered by enacted laws that

restrain activities in natural protected areas or indigenous territories. In the case of political

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power mechanisms, attempts of path dissolution were found in drivers of community

empowerment that also bounded electricity projects. 174

Another important finding was that in

the case of solar energy and other alternative renewable sources, they started to gain relevance

thanks to escalating side effects based on drivers of coordination effects at individual level.

9.4.1 Path Breaking from Efficiency Mechanisms

In recent years Costa Rica has experienced shortcomings of hydroelectricity generation, in

which not even the lake Arenal reservoir with its inter-annual storage capacity was able to

provide electricity during the peak summer months. The effects of changing climatic variations

are well known by the ICE and the Energy Planning sector. As declared during interviews with

officials at planning departments: “The only way to storage energy for the dry season is through

dams, but as there were losses in water resources during summer, the fossil fuel thermal back-up

must be used” (Interview 2P, 2014)

The reduced productivity of hydroelectricity during the dry season was considered responsible

for the implementation of the costly oil fueled plants. This trend raised the alarm from different

actors with various interests and motivations. Technical studies into this area support this

cause-effect relation for the Latin American region.

The studies found on this issue conclude that most obvious threats to hydroelectricity

production in Latin America are related to droughts, precipitation variability, and higher

temperatures (Tissot, 2012; Blacksher et al., 2011). In reference to Central America, besides the

indication of increasing droughts and heavy precipitation events, a significant increase in

hurricanes and temporal variability of river system discharge are expected (Blacksher et al.,

2011).

Those findings coincide with the studies carried out in Costa Rica suggesting rainfall increases

in the Atlantic, but with the opposite result in the Pacific (MINAE, 2009, p. 52). Another study

by Birkel (2006) analyzes hydroelectric droughts in Costa Rica in order to determine if this

trend has become more frequent and severe by using data from 17 watersheds with observations

from over 30 years (i.e. 1973-2003). Even though a pattern was not found for the whole

country, the results suggest a significant trend in terms of severity and frequency of drought for

some watersheds in the Northern Region and Central Pacific.

174 A distinction is made between legitimation and political power mechanism because reversing

legitimation mechanisms should be triggered by those who set the rules (e.g. the Energy Planning Sector).

When the norm is questioned by subordinated groups, the processes are linked to political power

relations.

202

A more recent study from Sainz de Murrieta and Chiabai (2013) use a sample of 40

hydroelectric plants in Costa Rica and relate them with biophysical data in order to estimate the

quantity of water available (i.e. runoff) for energy production with projections to the year 2100.

Their estimated climate change scenarios suggest that hydroelectric production will be reduced

between 41% and 43%. According to the study, it would be necessary to increase the installed

capacity about 50% or to double the installed capacity of all plants to reduce economic losses in

12%. This is indeed the share that the Reventazón HP and Diquís HP add in terms in installed

capacity (near 800 MW).

In the case of the ICE this was considered a temporal measure until new hydroelectric projects

enter their operational phase (ICE, 2014; Weigl, 2014). However, the extended period and

implications of these losses in hydroelectricity production also highlighted by the media,

increased awareness in planning departments at the ICE. In a coverage during 2013, the

Director of the Energy Planning Department at the ICE refers to the commissioning of a study

financed by the IDB to understand how changing weather patterns affect electricity production.

According to him: “The effects of climate change on temperature and river flows of Costa Rican

watersheds can lead the ICE to accelerate decisions regarding geothermal energy”.175

Certainly, the position of the ICE is not different from the Ministry in terms of strategies on the

uses of water resources; however the ICE was more cautious in its assessments in terms of

climate change adaptation. During interviews in 2013 there was detected an open debate at the

ICE concerning future climate change scenarios and decisions to be taken. Respondents from

planning departments felt that the discussion of “whether building large dams or not is the best

strategy against extreme climatic events, is still not clear” (Interviews 2P & 5Q, 2013).

Meanwhile, the renewable electricity potential of geothermal energy is considered the best

source to complement the decay of the hydroelectric preeminence. The potential of geothermal

installations is attractive and considered in all the routes of expansion. According to the

Electricity Expansion Plan (2014-2034), geothermal potential includes 165 MW currently

identified (i.e. Pailas 2, Borinquen 1 and Borinquen 2) and other new 330 MW geothermal

projects in natural protected areas (ICE, 2014, p. 91).

Apart from geothermal, specific projections at the country level concerning the incorporation of

alternative renewable sources, particularly the “non generic” ones like solar energy and biomass

stations, have yet to be developed. In Electricity Expansion Plan (2014-2034) the Route 0 or

base scenario progressively incorporates generic renewable energy projects with high variability

(e.g. wind energy and run-of-the river stations) without including specific projections.

175 “Energía geotérmica en Costa Rica”, Energías renovadas, 16.01.2013.

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However, future scenarios were mentioned during interviews with officials from planning

departments at the ICE.

To begin with, wind energy is already considered a generic renewable energy source like RORs

and soon will become part of the conventional energy sources. Nevertheless, the use of the

technology is constraint by its variability. There are projects to expand the ICE’s wind park (i.e.

“Tejona”, 20 MW), but considering the technical preventive measure (i.e. 350 MW burden)

(Interview 2P, 2014).

Planning departments at the ICE give considerably less attention in terms of exploring the

potential of “non generic” renewable sources like solar energy, biomass and biogas. The

explanation follows a straightforward train of thought, first these plants do not produce much

electricity, second their production is highly variable and third, in the case of biomass, the ICE

does not produce the raw material. Therefore, the strategy followed by the ICE is to support the

expansion of these sources through joint programs with private investors who have more

interest in these sources.

“The expansion of solar energy projects is estimated in 6MW, although there are

projects from private companies of 20MW and 10MW. (…) There is no intention to

build biomass electric plants because we do not produce the raw materials and the ICE

should be producing it in order to secure a continuity of supply” (Interview 2P, 2014).

These statements show that interest in wind parks, solar energy and biomass stations exists

among planning departments at the ICE, but this is built on their effects for the function of the

overall energy system. On the other hand, the institute also considers that private investors have

more interest in solar energy and biomass electric plants. In fact, the ICE participates in joint

projects and programs with private investors, which are not at the core of the institutes business

but are seen as a form of ‘social corporate responsibility’ or “the social face of the ICE”

(Interview 2P, 2014).

For instance, in the case of biomass there is a public-private project in the framework of the

Energy and Environmental Partnership for Central America (EEP), the ICE provides feasibility

studies and the private producers make the investment. The German Cooperation (GIZ) also

brings support with the cost of machineries. Similarly, through the Distributed Electricity

Generation (DEG) pilot program in the ICE brings support to private customers with the small

applications of solar energy and wind energy.

In the case of DEG, electricity produced by the customers from solar energy or other renewable

systems cannot be sold to the grid, although the ARESEP was working on protocols to

incorporate sales of solar energy through the Law 7200 (Interview 2F; Interview 3F, 2013).

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Through the Law 7200, electricity from biomass/biogas, similar to RORs and wind parks could

be sold to the grid. However, under this law the projects must be very cost competitive (due

auctions or invitation to tender): “First, projects have to be competitive in site. Second, when

the distribution lines are connected” (Interview 2P, 2014).

Main concern of private investors is a leveled regulatory framework to make transactions in the

electricity market fair among sources: “We are not asking for any prerogatives, just an

established legal framework” (Interview 4G, 2013). As derived from interviews to private

investors conducted in 2013, in this way the country can expand solar energy and other

alternative renewable energy infrastructures without expending large amounts of the national

budget in subsidies (Interview 4G, Interview 3P, 2013).

Taking the case of solar energy, a report from Deloitte (2013) indicated that while the drop in

cost of solar energy takes place in industrialized countries with manufacturing capacities,

developing countries can benefit from efficiency improvements and lower cost. At the level of

private investors and users, solar energy penetration is taking advantage of these improvements.

During interviews, private investors and civil society organizations claim that solar energy is

currently technologically feasible and economically profitable in the country.

Furthermore, the country has suitable irradiation conditions, twice as high as those in Germany,

and an average cost of the solar technology (between 7.8 and 9.1 US dollars cents per kWh for

small and medium scale applications) is cost competitive compared with conventional

infrastructures (Weigl, 2014). In addition, solar energy produce benefits for the overall energy

system using the technology to substitute all electricity produced from fossil fuels for peak

demand periods in a carbon neutral scenario. One interviewee inferred that solar energy is “a

significant alternative to substitute the use of bunker in Costa Rica, the cheapest option among

fossil fuels but also the one that contaminates most”, to supply the current and upcoming

electricity demand (Interview, 3P, 2014).

The use of solar energy alone to reach carbon neutrality in 2021 would be unrealistic.176

However, the contribution of wind energy, biomass, and other hybrid systems could also make

the goal achievable. In addition, since solar energy cannot be turned on and off as it is possible

with the use of fossil fuels, the country has hydroelectricity produced at the Arenal dam to fulfill

the electricity needed during peak demand periods. The study from Weigl (2014) modelled this

substitution of fossil fuels by solar energy and the balancing task of hydroelectricity on a yearly

and daily basis. His results are illustrated in Figure 11.

176 Though, 150 MW installed capacity per year will create more than 1 GW of solar installations by the

year 2021. This will represent 10 % of the estimated electricity demand in 2021, instead of using fossil

fuels, for more details see Weigl (2014).

205

The solar energy example shows that it would be technically possible to move away from the

large dams and the fossil fuels era sooner than projected. Even without the Diquís HP, the water

reservoir of the Arenal complex (i.e. Arenal, Corobicí and Sandillal) would be an effective

counterpart for solar electricity. In cases of higher requirements, other hydroelectric plants (e.g.

Cachí, Pirris and Angostura) could easily cover daily demand fluctuations, including the

possibility of the Reventazón HP since 2016 covering extra demands.

Figure 11. Yearly and daily scenarios of electricity generation, 2012 and 2021

Source: Weigl (2014)

Although the level of uncertainty is elevated, statements from the ICE’s planning departments

suggest that hydroelectricity vulnerability might be an element of path breaking in the future.

Climate change (or global warming) is an exogenous factor that will complicate hydroelectricity

generation, eventually reversing efficiency mechanisms of scale economies and reliable

electricity effects from these installations. To some extent, these antagonistic trends bring into

question the effectiveness of the ICE’s recommended plan based on the expansion of larger

hydroelectric projects.

Alternative renewable sources, like solar energy, have been growing faster, driven by profits

motivations of private investors encouraged by rules and norms that trigger coordination effects.

In addition, the escalating reactions take place when investors benefit from solar energy and

biomass opportunities domestically, supported by global industry developments that reduce

technology costs and improve efficiency. These effects are substantiated on the advantages of

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scale economies at a global industry level. Together, coordination effects at a domestic level and

scale economies at a global industry level, account for investors’ decisions.

9.4.2 Path Breaking Elements from Political Power Mechanisms

Community enabling drivers operate by changing the power game in decisions between

technologies. Communities, affected by hydroelectric projects, are gaining political power

through the law or the international support from different actors. This situation hinders further

installations of state- or private-owned technology. Drivers of community empowerment are

linked to legitimation mechanisms that reverse the self-reinforcement of dams.

Political power relations confront two main actor constellations. On the one hand, state and

private investors, the Energy Planning Sector and politicians (i.e. decision makers). On the other

hand, local communities allied with civil society organizations and international networks that

oppose such developments (i.e. secondary actors, directly and indirectly, influencing decisions).

Aside from hydroelectric projects withdrawn or delayed in the past (e.g. the well-known Boruca

HP, Los Gemelos HP, Pacuare HP), another group of projects had been left stranded with

pending legal issues, including the Diquís HP and another 10 private projects, out of 60 under

analysis, that raised concerns in different communities (Interview 2J, 2013). Two of them

prompted a moratorium declaration to new hydroelectric projects from local councils (i.e. Perez

Zeledón and Buenos Aires Municipal Councils).

In the case of the Diquís HP, opposing groups, besides local community associations, included

indigenous and environmental organizations, eco-lodges, civil society from nearby communities

and university students who raised concerns over social and environmental risks on the region’s

rivers.177

Meanwhile, powerful groups, with interest on the Diquís dam, are mainly the ICE and

the Energy Planning Sector, as well as politicians and some global environmental organizations.

In spite of political power differences, indigenous organizations have voiced concerns over the

Diquís HP, at international organizations and national legal instances, which forced the ICE to

slow down the project’s continuation. The visit of the United Nations Special Rapporteur on the

Situation of Human Rights and Fundamental Freedoms of Indigenous Peoples, in 2011, drew

attention on the weaknesses of deliberation processes in the Diquís HP development.178

Nonetheless, community empowerment, against hydroelectricity, was not only channeled

through international support and enacted regulations.

177 “Comunidades de la zona sur conformarán bloque de oposición a proyectos hidroeléctricos”,

crhoy.com, 22.10.2013. 178 “Relator de la ONU llama la atención por situación de pueblos indígenas”, Semanarion Universidad,

08.06.2011.

207

The convergence between socio-environmental organizations and communities’ claims noted by

Cartagena (2010) were reinforced, in the early 2010s, as they reached other local participation

instances. For instance, through networking with other national and international organizations

or reaching decision-making agents at municipalities. Through regular meetings, such as the

Meeting of Communities Threatened by Hydroelectric Projects in the Southern Region, held in

2013, communities exchanged information and joined efforts to oppose the construction of

several hydroelectric plants in the region.

In the case of communities, affected by the Díquis HP, they argue that the energy generated

from the HP would not remain in the national territory but rather be sold to the regional market

through SIEPAC.179

In the case of the smaller RORs, the projects raised local concerns on the

threats to water supply for the communal drinking water aqueducts (i.e. ASADAS), agriculture,

cattle, wildlife conservation and rural community tourism, while creating uncertain benefits.

Furthermore, as noted by the FECON, an environmentalist organization:

“These projects will add 71 MW, but because they are run-of-the-river and have small

reservoirs, their production is expected to decrease during the dry season. Consequently

they do not solve the underlying problem, which is to reduce oil electricity generation

produced during summer”. (Alvarez, 2013, p. 2).

A common denominator, among those discontent with the HP, is a top down imposition of

projects without prior consultation to local communities (i.e. indigenous and non-indigenous)

and the lack of integrated watershed management. At the heart of the conflict, there is a

structural distributive aspect “in defense of the public, and against private acquisition” and a

legitimation dispute concerning the communication of national and local welfare. Those

conflictual processes are a potential source of path breaking.

On the one hand, community empowerment operates as a counterbalance to the empowerment

of private and state investors, and the vested interest they created. Over time, this opposition

constituted a serious obstacle for the ICE and private developers given difficulties to find

adequate sites for new hydroelectric installations. Therefore, from the investors’ perspective,

these problems increase the (environmental and social) cost of electricity generating

installations.

On the other hand, liberalization reforms, in the electricity sector, produced another unintended

side effect over community empowerment that results from an emphasis on decentralization of

services. First, liberalization reforms increased the number of actors and the level of regulation.

179 “Encuentro de comunidades amenazadas por represas en la Zona Sur”, FECON, 26.09.2013.

208

Secondly, efficiency gains and low prices enabled the proliferation of distributed or

decentralized applications from alternative renewable sources.

Although the organization of the electricity sector, in Costa Rica, remained highly centralized

and regulated, altogether institutional and market transformations triggered diversification of

actors and electricity generation sources. Among experts, more decentralized or distributed

energy systems started to be considered the headland of a new emerging paradigm for

renewable energies such as solar PV. Figure 12 illustrates the differences between centralized

and decentralized energy systems.

Figure 12. Schematic view of centralized vs. distributed electricity generation

Source: Own compilation based on interviews

The main differences between centralized and decentralized electricity generation are in terms

of infrastructure (i.e. production, storage, transformation and distribution), but also in terms of

actors and governance structures. National and sub-national energy infrastructure used to be

built around a central converter (aka power plant) and grid networks would distribute the

generated electricity to end-consumers. Meanwhile, decentralized systems enhanced the reliance

towards distributed generation that involved local and small-scale providers including actors

with multiple and simultaneous roles as producers and energy consumers (Goldtahou, 2014).

However, this paradigm is contested by established centralized distribution companies. In Costa

Rica, the introduction of the Distributed Electricity Generation (DEG) pilot project best

illustrates the tensions between past and future electricity configurations (i.e. technologies and

institutions). The plan established the expansion of DEG to other regions, but this mandate has

Bioenergy /

Wind /

Solar, etcResidential

Commercial

Hydro /

Geotherma/

/ Solar, etc

Hydro /

Geotherma/

/ Solar, etc

Centralized Decentralized / Collaborative

Substation

with

Generation

Plant

Transmission &

Distribution Line

Residential

Industrial

Commercial

Transmission &

Distribution Line

Bioenergy /

Wind /

Solar, etc

Hydro /

Geotherma/

/ Solar, etc

IndustrialResidential

Industrial

Residential

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not echoed responses from other distribution companies. On the contrary, interviewees at the

ICE expressed reservations concerning distributed generation, seenas a disruptor of their core

business.

Meanwhile, in favor of distributed generation were private producers and their associations (i.e.

UCCAEP, ACOPE), solar energy advocates (e.g. ACESOLAR) and international cooperation

(i.e. GIZ), who consider that the changing paradigm “is a tendency that distribution companies

cannot stop” (Suntrace interview, 2014). In interviews held with experts from the electricity

sector, they also consider decentralized generation, or DEG, is likely to be the framework for

Costa Rica’s energy systems in the future.

As outlined by a Costa Rican expert: “decentralized units or nodes will be able to produce their

own electricity by using local sources through on-site technologies”. Combined with energy

efficiency practices and storage capacity to manage peak load demands, these decentralized

units could be integrated with other nodes (and scales) to exchange electricity among them

(Interview 1F, 2013). Moreover, even the transport sector will change this paradigm:

“Mobility will be more efficient since some productive activities and other services

would be integrated within the nodes, hence distances are reduced and the use of

electricity in transport is possible, while the quality of life is improved.” (Interview 1F,

2013).

In summary, managerial aspects of the changing electricity paradigm, together with social

discontent, and increasing demands of political participation from different actors, create further

challenges to the preeminence of the existing model. Community empowerment, together with

communication problems of local welfare and efficiency difficulties, can potentially disrupt the

outsets of a powerful actor constellation, who could reconsider or renegotiate commitments

towards hydroelectricity in future policies.

9.4.3 Path Breaking from Legitimation Mechanisms

Social acceptance evolves with social norms (formal and customary) recognized by society,

who also can turn them down. In the national energy system, clashes between norms, such as

the national mandate for the provision of electricity in the country and the autonomy of

indigenous territories, or the status of natural protected areas, have been important factors

generating mobilizations against the Boruca and the Diquís dams. These contradictions are

another element for the dissolution of the hydroelectric path dependency.

The institutional mandate’s belief to provide reliable electricity to the nation is still strong

within the ICE. The legitimation of this norm, beyond simple profit motivations, explains the

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position of the ICE to rebut the prohibition of electricity projects in some territories. The main

limitations are laid down by the National Parks Law 6084 (1977), the General Environmental

Law 7554 (1995) and the National Indigenous Law 6172 (1977) that restrict activities in natural

protected areas and indigenous territories.

In the Electricity Expansion Plan (2014-2034), the ICE has identified that approximately 25 %

of the national hydroelectric potential of 6500 MW is being exploited, while 780 MW or 16 %

from the remaining potential is actually located in natural protected areas (ICE, 2014).

According to the National Parks Law and the General Environmental Law, other commercial

activities besides tourism are excluded from these protected areas. Another 25 % of the potential

would directly or indirectly affect indigenous territories, protected by the National Indigenous

Law where these interventions in the environment meet heavy resistance (ICE, 2014).

Therefore, the actual potential that the ICE identified for further electricity production is

reduced at 2300 MW (ICE, 2014). The route of expansion recommended by the ICE and the

Energy Planning Sector in a carbon neutrality scenario based on the Reventazón HP (292 MW)

and the Diquís HP (650 MW), would already use almost half of these available potentials

(Interviews 2D; Interviews 4C, 2013). Hence, Costa Rica’s hydroelectricity availability is

actually becoming constrained.

Compared to the Boruca HP, the social and environmental effects of the larger Diquís HP are

downsized; this might reduce social mobilization against it, though, a number of illegalities still

remain present. The declaration of public interest and national convenience for the Diquís dam

project was questioned in the media upon pending Environmental Impacts Assessment

proceedings.180

Additionally, 10% of the project affects indigenous territories where the lack of

consultation has violated jurisprudence from the Inter-American Court of Human Rights and the

American Convention ratified by Costa Rica in 1970. Furthermore, this also contradicts several

articles of the National Indigenous Law 6172 (1977).181

At the moment of writing this research, none of these aspects have been resolved and

consequently, the Diquís HP is at a standstill until the consultation process, with affected

populations, is carried out.182

The incoming government will have to assume the responsibility

regarding the project’s future. The assessment of the carbon neutrality scenario is also

fundamental for this resolution and so are the choices to be made.

180 “El Diquís, frente a la jurisprudencia de la Corte IDH”, La Nación, 01.11.2012. 181 “Ilegalidades del Proyecto Hidroeléctrico Diquís”, La Nación, 14.07.2011.; “El Diquís, frente a la

jurisprudencia de la Corte IDH”, La Nación, 01.11.2012. 182 “Proyecto eléctrico Diquís cumple tres años varado”, LA Nación, 29.04.2014. Since the visit of the

indigenous speaker James Araya, in 2011, who made suggestions on the issue.

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In the case of alternative renewable energy, geothermal energy has more social acceptance

among sources. In the interviews carried out, geothermal energy was ranked first among

politicians, interviewees and the media (Interview 3E; Interview 3H; Interview 1J; Interview 2J,

2013). Geothermal energy is also number one among Planning Departments at the ICE. The

technology is regarded as equivalent to hydroelectricity in terms of reliable electricity effects

(i.e. providing firm and stable electricity) with the advantage that it is not disturbed by changing

weather patterns.

Nonetheless, geothermal energy capacity is limited since the sites with the highest potential are

located in volcanic areas that are under some category of natural conservation (ICE, 2014).

According to the Electricity Expansion Plan (2014-2034), 76% of the high enthalpy theoretical

potential is being exploited already. Therefore, it is expected that low enthalpy geothermal

exploitations and investments outside natural protected areas will be accelerated (Interviews 2D;

4C, 2013).

The country’s interest to develop geothermal energy is high; likewise, among private investors.

State and private investors have promoted different bill proposals to change the law and allow,

either high enthalpy geothermal exploitations by the ICE inside natural parks, or low enthalpy

exploitations by private companies outside natural parks. In this regard, interests of state and

private investors coincide.183

Natural protected areas, on the other hand, also have high legitimation in the Costa Rican

society. Natural parks and conservation areas are iconic in the national conservation history and

continue being relevant in the economic development paradigm based on tourism revenues and

carbon neutrality aims (i.e. legitimation based on the communication of national welfare). This

limitation is acknowledged by the ICE, as indicated in the expansion plan: “The feasibility to

develop the 330 MW new geothermal projects, before 2028, is diminished if there is no

agreement concerning the resource inside national parks” (ICE, 2014, p. 91).

Meanwhile, solar energy, wind parks and biomass stations have currently no constraints of this

type. First, they are at initial stages of their potential capacity, particularly solar energy. Second,

they are not bounded to be produced in natural protected areas. Third, none of them have faced

resistance with local communities.

To sum up, whether restriction to electricity generating installations, of any kind, is allowed or

not in natural protected areas or indigenous territories is still a matter of debate that involves not

only efficiency, but also legitimation aspects. If clashes between norms continue, it is more

183 “PAC y Libertarios replantean posición sobre energía geotérmica”, Semanario Universidad,

10.06.2015.

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likely that projects, like the Diquís dam, and geothermal developments will continue to be

stranded. Hence, the solution is a matter of deliberation among different society groups, an

aspect that highly relies on power relations.


The integrated analysis of findings regards path dependency in the Costa Rican electricity sector

to systemic mechanisms from the perspective of efficiency, political power and legitimation

frameworks. At the actors’ level, main interactions are between powerful state players, private

investors and grass-root organizations, which directly or indirectly sway decisions. Their

influence on energy policies have been at different phases with changing emphasis and a great

deal of interweaving.

Historically, state empowerment during the ‘developmental state era’ favored the ICE’s

autonomy and good reputation from politicians and the general public. Therefore, from this

period, the Institute emerged as a new political actor. After liberalization reforms, the actor

constellations changed and new renewable energy sources were incorporated to the national

energy mix. In spite of inherent contradictions, the institutional arrangements established in the

electricity sector tend to emphasize their cooperative interrelation.

Concerning the mechanisms’ results causing path dependency on hydroelectricity, they are

mostly driven by reliable electricity effects, the empowerment of private actors and the

communication of national welfare. To some extent, the same factors that reproduce the

preeminence of hydroelectricity installations, restrain alternative renewable energy use. In

particular, solar energy illustrates very well how alternative energy sources were reduced to a

subsidiary role in the national energy system.

Interest, on alternative renewable sources, exists within the ICE, but this could be separated into

two different logics. On the one hand, the ICE has an interest in alternative renewable sources

that is directed to the function of dams to the system. On the other hand, the Institute also

considers that private investors have much interest in solar energy and biomass electric plants.

Additionally, the present study found that systemic efficiency accounts based on drivers of

global climate change effects, effects, and reliable electricity effects are closely interlinked.

From the perspective of the ICE, the Energy Planning Sector and the politicians who have the

political power to implement institutional changes, these decision logics are predominant.

References to global climate change effects alluded more to efficiency mechanisms rather than

to its legitimation. Conversely, drivers of national welfare effects reinforce hydroelectricity

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because it increases competitiveness, energy efficiency and lowers electricity bills, but the

logics of this mechanism appears more as a powerful legitimation argument.

Alternative renewable sources, including RORs, wind parks and solar energy, are considered

highly un-reliable and lacking storage capacity by powerful state actors. Regarding fossil fuel

sources, although the natural gas scenario has gained acceptance among politicians and part of

the Energy Planning sector, its advantages are questioned inside planning departments at the

ICE and by other experts.

About the forces reversing path dependency, the elements of path breaking challenging the

preeminence of hydroelectricity are triggered by community empowerment, problems in the

communication of local welfares, and the negative effects from exogenous climatic shocks.

Although the uncertainty level is high in the case of external shocks, results of technical studies

in this field are congruent with the statements from the planning departments at the ICE. Both

suggest that changing weather patterns, although contingent and perhaps cyclical, are seriously

challenging the hydroelectric path.

Political power relations have shown tensions between hydroelectricity project developers and

socio-environmental impacts on local communities. In this sense, social discontent and

increasing demands of political participation are combined with the challenges of the changing

paradigm towards decentralized energy systems. On the other hand, hydroelectricity remained a

legitimate source to satisfy growing electricity demands and reduce poverty from the

perspective of the ICE, the Energy Planning Sector, politicians and powerful international

organizations.

Nevertheless, community empowerment, together with additional problems from legitimation,

at a local level, can potentially transform powerful actors’ viewpoint who could reconsider or

renegotiate their commitment towards hydroelectricity in future policies. Since the 1990s,

hydroelectricity legitimation suffered more intensively what path dependency theory outlines as

(degenerating) side effects from decisions. In this sense, the communication of local welfares

started reversing. To some extent, these antagonistic trends question the effectiveness of the

ICE’s recommended plan based on the expansion of larger hydroelectric projects.

Finally, the restriction to electricity generating installations, of any kind, in natural protected

areas or indigenous territories is still a matter for debate that involves efficiency, political power

and legitimation elements. If clashes between norms (i.e. natural conservation, indigenous rights

and electricity provision) continue, it’s more likely that projects like the Diquís dam and

geothermal developments will continue stranded. Therefore, the solution lies in the deliberation

among different society groups, an aspect that also shall highly depend on power relations.

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10 Conclusions

10.1 Main Research Results

Why did Costa Rica choose limited utilization of alternative renewable sources, above all solar

energy, to achieve the goal of carbon neutrality by the year 2021, while in an existing context of

declining hydroelectricity contribution, the use of conventional energy sources gain relevance in

future scenarios? To answer these questions I conducted an analysis of three types of

mechanisms (i.e. efficiency, political power and legitimation) influencing decision makers’

choices among main renewable electricity generation sources (i.e. hydroelectricity, wind parks,

geothermal energy, solar energy and biomass stations) and analyzed them, over different periods

of time, which led me to the following conclusion:

Costa Rica’s energy system developed a path dependency, in the electricity sector, that

reinforces hydroelectricity development through decisions, which are beyond individual cost-

benefit assessments made by long-standing sector institutions. As a result, the country engaged

in long-term investment strategies prioritizing the well-tried hydroelectric path to achieve

carbon neutrality and 100% renewable energy by the year 2021. The same factors, which

reproduce the preeminence of hydroelectricity, restrain the subsequent ability of the national

energy system to further implement policies incorporating solar energy and other alternative

renewable sources.

Figure 13. Mechanisms and drivers reinforcing or reversing the hydroelectric path


The choice of technologies, in the country, is largely influenced by centralized decisions made

in the past and reinforced, over time, by politicians, the Costa Rican Electricity Institute (ICE)

and private regulatory entities. I identified eleven driving forces to explain technological and

institutional developments in Costa Rica’s energy system, which evolved from the three

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mechanisms of efficiency, political power and legitimation on the basis of Sydow and

Schreyögg’s, (2013), Hall and Taylor’s (1996) and Mahoney’s (2000) formulation of self-

reinforcing mechanisms. On the one hand, eight of them produce path dependency reinforcing

the hydroelectricity path, while on the other hand, there are three drivers of path breaking by

which patterns marked by path dependency might be reversed. Figure 13 captures these

dynamics.

The path under analysis emerges from the intersection of technological and institutional

trajectories in Costa Rica’s energy system (see Chapter 5). On a technological level, this path

dependency explains the continued reproduction, though possibly at slower rates, of

hydroelectricity investments (i.e. a stabilization stage). This technological trajectory is not only

based on investment decisions, but also on institutional, political or personal interests. There is a

clear pattern that path dependency on hydroelectricity renders decisions, on alternative

renewable technologies, difficult to incorporate.

On the institutional level, the path is notably due to the impact of the ICE and the peculiar

mixed electricity regulatory sector in the country. They provided the material and ideological

foundations for the consolidation of the national hydroelectricity-based energy model, with

limited dissemination of alternative renewable sources. Institutions, in the electricity sector,

evolved along with Costa Rica’s geographic and environmental history, urged by the creation of

natural protected areas in the country.

In fact, from the study of past events (1950-1989), I distinguished a first observation period,

initiated by a critical juncture in the national electricity sector, given by the creation of the ICE

(1949), which occurred during the welfare state era. During this interval, electrification was

expanded in the country and opportunities for hydroelectricity developments (planning and

construction of large dams) flourished under public actors, in particular the ICE. This timespan

also set the bases for the Costa Rican “Green Republic”, bringing about a compatibility between

the economic growth model and progressive environmental conservation policies. At the end of

this period, solar energy was at experimental stages, geothermal energy generation was being

explored and preliminary studies of wind parks were conducted.

A second time frame, during the 1990s, seeks transformation preceded by the Law to promote

private electricity generation and subsequent reforms (1995). This period brought a certain

degree of diversification of energy sources, as well as the incorporation of private energy

producers thanks to legal liberalization reforms. These, in turn, produced tensions between

public and private interests with repercussions on future developments.

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A third time period identifies more recent developments, following climate change

commitments and the country´s carbon neutrality initiative (2007) to be achieved by 2021. Each

interval triggered new arrangements between actors in the electricity sector, but also latent

conflicting processes, in terms of public-private relations (i.e. state, private actors and

community based organizations). Figure 4 provides a general overview of technological and

institutional patterns of Costa Rica’s energy system in different time frames.

During the 2000s, Costa Rica’s transition towards carbon neutrality and its reliance on

hydroelectricity illustrated, more clearly, the tensions between past and future electricity

configurations. Technologically, climate change (or global warming) became an exogenous

factor that challenged the use for hydroelectricity, while a new paradigm of distributed

electricity generation defied the model of centralized energy distribution from established

companies. Institutionally, conflicts due to established norms and regulations became apparent,

such as the ICE’s national mandate for the provision of electricity in the country vis-à-vis

reforms promoting private initiatives in electricity generation, the respect of the autonomy of

indigenous territories (guaranteed by international treaties ratified by Costa Rica), and the status

of natural protected areas.

When comparing actors’ decisions over time, it became evident that there are some patterns in

the selection of electricity projects. These patterns or routines initiated in the past, remained

ever-present in current decisions, and are also reflected in the energy plans beyond 2021.

Among the self-reinforcing mechanisms, producing path dependency on hydroelectricity in

Costa Rica’s energy system, are systemic and individual efficiency accounts enhanced by

drivers of political power and legitimation mechanisms.

Systemic efficiency accounts, include global climate change effects, reliable electricity effects

and national welfare effects. All three systemic efficiency accounts are interlinked and

considered important the country’s renewable energy system decision-making. Those drivers

are also associated to individual cost-benefit assessments, in the selection of projects by public

and private investors, which include coordination effects, learning effects and economies of

scale.

Among systemic efficiency mechanisms, promoters of reliable electricity prevail in decisions,

i.e. powerful public entities such as the ICE, ever since the early stages of the national

electricity sector during the ‘developmental state era’ (1950-1989). Those drivers provide

arguments for the inertia of large hydroelectric projects and fossil-fueled plants as back-ups.

Within this logic, efficiencies, resulting from continuously supplying electricity to customers,

produce increasing gains to the national energy system, including low operation costs and

attractive pricing through long-term agreements. Other technical characteristics, at individual

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level, such as load factor and scale economies, make hydroelectricity and its fossil fuel back-up

systemically reliable.

Promoters of reliable electricity from different energy sources have been closely related to

drivers of national welfare effects, since the beginning of electrification, through the impulses of

economic growth. Furthermore, when climate change commitments gained relevance, in the

national political agenda during the 1990s and also after the announcement of carbon neutrality,

the Energy Planning Sector discussed global climate change with a focus on potential efficiency

effects on national mitigation and adaptation strategies.

More recently (2010-2014), when comparing the different technologies powerful state decision-

makers from the energy planning sector, including - besides the ICE - the Ministry of

Environment, politicians and regulatory bodies consider dams or hydroelectric reservoirs to be

the best providers of electricity storage systems to guaranty reliable electricity supply.

Furthermore, the electricity expansion plan (2014 – 2034) recommends the incorporation of two

large hydroelectric plants, the Reventazón HP (292 MW) and the Diquís HP (650 MW), to

begin operation in 2016 and 2025, respectively. The plan also elaborates on the projections

regarding possible scenarios of natural gas starting as early as 2025. According to the ICE’s

planning departments, and given its national mandate to provide electricity, the alternative of

exploiting conventional and nonconventional fossil fuel resources should not be disregarded.

Meanwhile, the aspect of reliability precisely limits the progress of alternative renewable

sources. Except for geothermal energy, which is considered steadfast by the energy planning

sector, the potential of alternative renewable sources with high variability (e.g. wind energy and

run-of-the river stations) is underrepresented within this plan. While an alternative scenario

considers their progressive incorporation, it also points out to their main drawbacks in terms of

high variability and the lack of storage capacity. Therefore, they are limited by technical

preventive measures that, in the case of solar energy, restrain the advance of installations to no

more than 5 MW of installed capacity.

Also from the perspective of political power and legitimation frameworks, Costa Rica’s energy

system developed elements of path dependency. Hydroelectricity installations progressed and

were considerably reinforced by both frameworks. Two drivers from these mechanisms, causing

path dependency, are the empowerment of private actors and the communication of national

welfare, derived from political power and legitimation mechanisms, respectively. They evolved

from interactions between main decision-makers and secondary actors influencing decisions,

such as worker unions (especially before 1990), civil society organizations and other private

associations, international actors and local municipal councils, more recently. Table 8 provides

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a general overview of the constellation of actors involved, their interests and systemic

mechanisms, driving their decisions, in different time periods.

As to political power relations, the empowerment of private actors in Costa Rica’s energy

system followed the same energy pattern in the selection of technologies, as did the ICE and the

Energy Planning Sector, at previous stages. Although private electricity producers lead

investments in alternative renewable sources, like wind energy and biomass stations, initially

their choices favored the predominance of smaller hydroelectricity projects. Nonetheless,

private investors are seen by other actors (i.e. the ICE, regulatory bodies and other private

organizations) as institutional entrepreneurs who propel solar energy developments and biomass

electricity stations.

Since liberalization reforms, the empowerment of private investors was facilitated by existing

environmental and market regulations. This process created vested interests in the electricity

sector where the state apparatus was used by political and private business interests during the

last two governments (2006-2010 and 2010-2014), to promote an electricity agenda of private

investment in renewable energy. This agenda foresaw the expansion of hydroelectricity projects,

disregarding environmental aspects and problems with local communities, which became

evident in bill proposals promoted during these administrations.

Concerning legitimation, the national welfare aspect also plays a key role in the path

dependency of hydroelectric dams, particularly within powerful state actors, like the ICE, and

its national mandate to provide electricity. Concepts of economic development, solidarity and

social welfare are rooted in the ICE’s history and continue present in its organizational values.

During the political campaign, in 2013, this was reasserted by the Energy Planning Sector, the

ICE, and political parties in support of the Diquís Dam project.

Contrary to expectations, legitimation concerning actions against global climate change was not

relevant in the decision-making process among energy promoters, and while global climate

change was constantly present in communications from the Ministry and politicians, it had no

impact on the choice of projects. Similarly, the electricity expansion plan (2014-2034), while

acknowledging the vulnerability to climate change of the national renewable hydro-based

energy model, does not reflect this in its recommendations.

In the case of alternative renewable sources, neither legitimation of actions against global

climate change has prompted any deviation from the hydroelectric pathway, nor have national

or local entities. During the 1990s, the ICE’s decisions to initiate developments of wind parks

and geothermal projects were supported by the institute’s belief that it was the right thing to do

to complement hydroelectricity.

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Energy promoters’ preferences tend to rank hydroelectricity or geothermal energy highest, while

for the energy planning sector, the criterion is mainly one of systemic efficiency, thus ranking

wind and solar energy last because of load factor considerations (i.e. they are considered highly

variable and lacking storage capacity). The preferences of politicians and environmentalist

organizations were not so different from those of the energy planning sector. Although in the

case of environmentalists, global climate change plays a significant role in their selection.

Politicians place dams as a priority, but delays in projects, caused by social resistance position

geothermal stations as the second best option. State and private investors have shown interest in

geothermal energy as well, inside or outside natural protected areas. Therefore, elements of

political power and legitimation mechanisms are also at stake influencing preferences.

Precisely, the aspects of institutional change, which I describe as elements of path breaking,

emerge from intrinsic conflicting political power relations and legitimation problems. Among

the self-reinforcing mechanisms producing path breaking are community empowerment and

local welfare communication of electricity projects. Contingently, another exogenous element of

path breaking is the outcome of climatic variability effects increasing hydroelectricity

vulnerability (i.e. reliable electricity effects).

Legitimation mechanisms, interrupting hydroelectricity reproduction, are centered on the

contradictions between the ICE’s institutional mandate for the provision of electricity and

decreed laws that constraint electricity developments in indigenous territories and natural

protected areas. For instance, the most sensitive aspect of the Diquís hydroelectric dam is the

lack of consultation with indigenous groups, given affectation on their territories. Claims of the

ICE, the Energy Planning Sector and politicians, who defend the project, would have a stronger

resonance on final decisions if the effect on indigenous territories is excluded.

The institutional mandate’s belief to provide reliable electricity to the nation is still strong

within the ICE. The legitimation of this norm, beyond simple profit motivations or efficiency

claims, explains the ICE’s position to rebut the prohibition of electricity projects in some

territories. The main limitations are laid down by the National Parks Law 6084 (1977), the

General Environmental Law 7554 (1995) and the National Indigenous Law 6172 (1977) that

restrict activities in natural protected areas and indigenous territories.

In the Electricity Expansion Plan (2014-2034), the ICE has identified that approximately 25%

of the national hydroelectric potential is being exploited, while 16% of the remaining potential

is actually located in natural protected areas, and another 25% of the potential would directly or

indirectly affect indigenous territories. The remaining potential has faced some problems of

social acceptance as well. Social clashes were evidenced, in 2000, when a reform proposal,

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named the “ICE Combo”, aimed to change the structure of the sector and loosen projects’ legal

restrictions.

Geothermal energy capacity is also limited, since the sites with higher potential, are located in

the volcanic areas that are under some category of natural conservation. According to the ICE,

76% of the high enthalpy theoretical potential is being exploited already. Therefore, it is

expected that low enthalpy geothermal exploitations and investments, outside natural protected

areas, will be fast-tracked. Private investors, supported by different associations, have been

promoting a group of bill proposals to change the law and allow either high enthalpy geothermal

exploitations by the ICE, inside natural parks, or low enthalpy exploitations, by private

companies, outside natural parks.

Natural protected areas, on the other hand, also have high legitimation in the Costa Rican

society. Natural parks and conservation areas are iconic in the national conservation history and

continue to be relevant in the economic development paradigm based on tourism revenues and

carbon neutrality goals (i.e. legitimation based on the communication of national welfare). This

is acknowledged by the ICE, who considers that the feasibility to develop new geothermal

projects, before 2028, is lessened if there is no agreement concerning future resource

exploitation inside national parks.

Nonetheless, legitimacy problems are not limited to dams, neither to indigenous territories and

natural protected areas. Several smaller run-to the river stations, outside protected areas, raised

criticism from environmental entities, organized communities, indigenous groups and global

networks. Most of these hydroelectricity projects were contemplated, under Law 7200 (1990,

1995), which allowed limited participation of private generation plants.

At the same time, within the ICE itself, there are some contradictions between organizational

values. Earlier institutional emphasis, on economic and social development, has been shifting

towards efficiency goals of economic competitiveness. In this context, being “profitable”

became part of the Institute’s values. Likewise, the ICE adapted to the rules of the game in

competition with private investors, nationally and internationally, to invest domestically as well

as abroad through the Central American Electricity Market.

Path breaking elements, from political power relations, confront two main actor constellations.

On the one hand, state and private investors, the Energy Planning Sector and politicians (i.e.

decision makers), on the other hand, local communities allied with civil society organizations

and international networks that oppose such developments (i.e. secondary actors directly and

indirectly influencing decisions).

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A general political disenchantment has manifested itself in the electricity scene. Several

hydroelectric projects are associated to vulnerable livelihoods, inequitable access to water

resources and a lack of participation from local communities. Besides hydroelectric projects

withdrawn or delayed in the past (e.g. the well-known Boruca HP, the Los Gemelos HP, the

Pacuare HP), another group of projects are stranded with pending legal issues, including the

Diquís HP and another 10 private projects, out of 60 under analysis, that raised concerns in

different communities. Two of them prompted a moratorium declaration to new hydroelectric

projects by local councils (i.e. Perez Zeledón and Buenos Aires municipal councils).

In spite of political power differences, indigenous organizations have voiced concerns over the

Diquís HP, at legal instances, forcing the ICE to slow down the project’s continuation,

especially after the visit of the United Nations Special Rapporteur on the Situation of Human

Rights and Fundamental Freedoms of Indigenous Peoples in 2011. According to the U.N.

Special Rapporteur, deliberation processes have been weak in the Diquís HP development.

A common denominator of discontent is a top down imposition of projects without consultation

with local communities (i.e. indigenous and non-indigenous) and a lack of integrated watershed

management. At the heart of the conflict, there is also a structural distributive aspect described,

in short, as “in defense of the public, and against private acquisition” (Raventós 2012) and a

legitimation dispute concerning the communication of local and national welfare. Community

enablement operates as a counterbalance of private and state investors’ empowerment, which in

the past, joined forces in decision-making. Over time, this opposition constituted a serious

obstacle for the ICE and private developers given the difficulties to find adequate sites for new

hydroelectric installations. From the investors’ perspective, these problems increased the

(environmental and social) cost of electricity installations. Therefore, these processes also

produced an effect on efficiency mechanisms as well, reversing drivers of scale economies and

reliable electricity effects to some extent.

For alternative renewable energy sources, such as solar energy, this open situation is unlocking

the hydroelectric path. Besides political power and legitimation problems, efficiency advantages

to these sources have also emerged from the adverse effects undergone by hydroelectricity.

Considering climatic hydroelectricity vulnerability, the level of uncertainty is high. The ICE’s

planning departments suggest that these antagonistic trends bring into question the effectiveness

of the suggested plan based on the expansion of larger hydroelectric projects.

Instead, the Energy Planning Sector estimates that solar (and marine) energy will have more

relevance around 2030. Private investors and other civil society organizations claim that,

currently, solar energy is technologically feasible and economically profitable in the country

and technical studies supported by the Solar Energy Association in Costa Rica (Acesolar)

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demonstrate that, in terms of irradiation conditions and an average cost (i.e. ranging between 7.8

and 9.1 US dollars cents per kWh for small and medium scale applications), solar energy plants

are considered to be cost competitive compared with conventional infrastructures.

Furthermore, solar energy also has systemic advantages, providing benefits for the overall

energy system. The technology can be used for peak demand periods in a carbon neutral

scenario. According to estimations, solar energy could substitute all electricity produced from

fossil fuels and reduce hydroelectricity vulnerability, including surges in the electricity demand

by the year 2021.

In addition, solar energy, wind parks and biomass stations have more possibilities for

expansion. Not only because they are at initial stages of their potential capacity, particularly

solar energy, but also because they are not bounded to be produced in natural protected areas or

indigenous territories. Neither have they faced problems with local communities. However,

preferences among sources rank solar and wind energy third or fourth after on-grid biomass.

10.2 Theoretical and Policy Implications

This research sought to understand the need for an integrated approach to the analysis of energy

transitions towards low carbon and renewable energy goals, as proposed by Pachauri and

Spreng (2012). Through the combination of theoretical approaches of path dependency and

institutional entrepreneurs, together with elements of governance, at a national and global level,

I was able to reveal significant aspects of Costa Rica’s energy system development, stabilization

and change, which have been less explored in the academic literature. The research findings also

include theoretical and policy implications.

Five theoretical implications are highlighted from the analysis. First, the concept of path

dependency and path breaking show that Costa Rica’s energy transition towards carbon

neutrality, in 2021, and its reliance on hydroelectricity illustrates tensions between past and

future electricity configurations. In this context, this thesis confirms Stirling’s (2014) claim that

understanding possible ‘sustainable energy’ transformations require attention towards many

thorny issues in social theory related with agency and structure, as well as the interplay of

power, contingency, and practice.

Decisions between technologies, in the Costa Rican electricity sector and features of rigidity or

decay found, in specific cases, were explained by distinguishing three types of mechanisms (i.e.

efficiency, political power and legitimation mechanisms) and comparing how they unfolded

over time from the perspective of different actors. The thesis also elaborated on the different

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drivers that emerge from each framework, distinguishing antagonistic trends as well as elements

of institutional change (see Chapters 6, 7, and 8).

Second, this thesis further developed the concept of self-reinforcing mechanisms, in particular

for the operation of different forms of mechanisms derived from efficiency, political power and

legitimation accounts. The historical approach of path dependency emphasizes the importance

of initial decisions and choices of venues. In the case of Costa Rica, this thesis found that the

progressive logic of self-reinforcing mechanisms can explain a policy gap in the national energy

system towards carbon neutrality, leading to a stage of path dependency on dams and fossil-

fueled plants as back-up.

The development of a path dependency in Costa Rica’s energy system and the elements of path

breaking, on the basis of the three self-reinforcing mechanisms, confirmed the proposition to

explain path dependency from Mahoney (2000; 2006). According to his claim, specific

mechanisms, besides utilitarian logics (i.e. efficiency), can explain path dependency with

application on political science cases. He introduces functional systemic aspects, political power

and legitimation explanations.

Following this framework, the present research operationalizes both concepts of legitimation

and political power, in a way, that they were useful to seize drivers linked to values and power

relations that otherwise are difficult to grasp. Chapter 2 developed the theoretical approach and

defined the main concepts, such as those of self-reinforcing mechanisms, as well as notions of

efficiency, political power and legitimation. In the case of Costa Rica, for instance, there are

clashes between norms that implicate solutions based on deliberation among different groups of

the society, an aspect that depends on power relations as well.

In that regard, a third theoretical implication shows that “change actors” or institutional

entrepreneurs can shape institutions through strategic behavior, but they are also constrained by

existing institutions, social norms and power relations, as has been argued by

neoinstitutionalists. Findings, in this thesis, question the claim by Sydow et al., (2009) that

power structure is part of context conditions or contextual factors that enhance or hinder the

unfolding self-reinforcing mechanisms, but are not equated to them.

In the case of Costa Rica’s political power, accounts also developed patterns in actors’ decision

that became apparent in the strategies of the energy planning sector and in the strategic behavior

of institutional entrepreneurs, such as the ICE, private investors associations or civil society

organizations. Although, there are no strong political elites in the country that benefit from

existing institutions, powerful actors’ decisions respond to particular dynamics of reproduction

that accounted for the empowerment of private actors, on the one hand, and community

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empowerment on the other. In this way, this thesis introduces power relations into the analysis

of a path dependency outcome in Costa Rica.

Fourth, the research, hereby, confirms that global norms are interpreted and adapted to a

specific context by actors’ interests and values, which are not fixed, but some of them have

enduring consequences that are difficult to change. In this sense, some values that are

considered universal are interpreted differently by diverse actors. Global climate change, for

instance, is considered the main factor driving decisions on energy transformation in the last

two decades.

Based on my analyses, for the case of Costa Rica, I found that climate change discourses

certainly drive energy choices that favor the prioritization of dams (see Chapter 9). An in- depth

analysis of the mechanisms behind actors’ decisions evidenced that the motivation of the energy

planning sector is mostly concerning climate change consequences over reliable electricity

effects, rather than legitimation of actions against global climate change itself; conversely,

global climate change is widely accepted among environmental organizations.

Fifth, this thesis provides evidence of the increasing fragmentation in the emerging renewable

energy governance field and investigates decision-making processes in the electricity sector of a

variety of actors and among different renewable energy sources. In terms of renewable energy

sources, they evolve from the only consideration of hydroelectricity dams towards a broader

fragmentation that include distributed electricity generation sources, such as solar energy

systems (small and medium size, on- and off-grid). In terms of actor constellations, the

spectrum of actors involved in electricity decisions changed with liberalization reforms, in the

sector, during the 1990s. By the end of the period, three constellations of actors can be

distinguished: decision makers (i.e. state and private investors, the Energy Planning Sector and

politicians); secondary actors directly influencing decisions (i.e. civil society organizations,

public and private associations, the media and international organizations); and secondary actors

indirectly influencing energy decisions (i.e. local communities and the general public as well as

their international networks).

The policy implications from the present research are directly connected to the relevance of

timing for policy-making in Costa Rica towards achieving carbon neutrality in 2021. In this

pathway, the country’s challenges are framed in the arena of energy decisions that are based on

elements of efficiency, political power and legitimacy shaping technological and institutional

trajectories. Therefore, sound policy advice is derived from the entanglements that are beyond

single models, evidencing the causes of inertia and the opportunities for change.

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When asked why there was no significant support for solar energy, in the past, and why there

has recently been an increasing interest in the technology to be translated into policies

transforming the national energy system, efficiency arguments hold an important part of the

answer. In particular, the systemic aspects of the technology reliable electricity effects are of

central motivations restraining the technology’s use.

In the last years, installed capacities of solar energy have been growing faster, in part, urged by

profit motivations of private investors. The current study found that the individual choices of

private investors are motivated by rules and norms that trigger coordination effects from market

regulations, but also by the new paradigm of distributed electricity generation. Nonetheless,

their penetration is still limited.

Although technology prices and cost play a role in individual accounts of investors, they have

limited weight in policy decisions. Decisions by powerful actors that are tipping the balance

towards alternative renewable sources, through systemic accounts, have more relevance. These

actors include the energy planning sector, at a national level, and also the influence of global

participants from the energy industry to which political power and legitimacy resources also

play a role. Similar conclusions can be drawn from the case of other alternative renewable

energy sources, such as wind turbines, whose installations have been growing since the 1990s,

but that remain limited in decisions towards carbon neutrality.

All these contributions to theory and policy confirm the benefits of applying within-case

analysis by means of a mechanism-centered approach. Hypotheses and theory are used to


operate in the case. Distinctly, I found that most mechanisms from efficiency, political power

and legitimation worked as expected when applied to the Costa Rican case.

Although generalization was not the objective, it is possible that some systematic parts of the

mechanisms could “travel”, but not the case-specific conglomerate. Researchers, in the field,

could also judge the findings of the particular case interesting in relation to similar puzzles

affecting other countries in Latin America or other regions. However, this research leaves “the

identification of universal or quite general problems” (Rueschmeyer, 2003: 330) for further

research.

The problem of equifinality (i.e. many alternative causal paths for the same outcome) is known.

This was the case in the current research since the outcome from efficiency mechanism is

complemented by political power and legitimation accounts in order to explain the case.

Therefore, the consistency of path dependency explanations is reduced because its central figure

is self-reinforcing sequences of the same mechanism. Then again, such a result was compatible

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with the eclectic use of theories from historical institutionalists who combine the ‘calculus

approach’ and the ‘cultural approach’ to explain how institutions affect behavior and why

institutions persist over time (Hall and Taylor, 1996).

Lastly, this study is also mindful of the difficulties in assigning causality in single case designs

because of the limitations of the analysis and the underlying assumptions. Those limitations are

not resolved, however causality is not a particular weakness of this research and it is also shared

by quantitative works (Rueschmeyer, 2003). Furthermore, an ongoing debate among scholars on

mechanisms reveal differences between path dependency and causal mechanisms, since

studying contingent events is not generalizable to causal factors. Nevertheless, path dependency

is a potentially important strand in the overall project of historical-sociological investigation.

10.3 Implications for Future Research

Future research can tie into further questions and findings from this thesis and contribute to

academic literature on energy transition towards low carbon energy systems, in small states, on

several points. First, future in depth analysis, in other cases, with similar ambitions of energy

transformation might be relevant to approach low carbon energy aims, from an integrated

perspective, suited to furnishing sound policy advice. The approach used, in this thesis, can help

to identify possible causes of status or change from different perspectives that can be grouped

into efficiency, political power and legitimation. In addition, policy implementation can be

improved, drawing from different experiences, through international or South-South

cooperation projects and partnerships.

Second, it might also be interesting to extract comparative analyses (i.e. most similar or most

dissimilar research design) once comparative puzzling cases are found. This might allow

obtaining inferences to a wider population of cases, as well as for theory development. In

particular, it might be of interest to analyze whether self-reinforcing mechanisms operate similar

to the case of Costa Rica or as expected by theory.

For example, in relation to the relevant role of systemic efficiency mechanisms, in the Costa

Rican case, it would be pertinent to see whether these accounts have less weight in countries

with a market regime in electricity production. Similarly, it would be appealing then, to see

how aspects of legitimation and political power are incorporated in such regimes. For instance,

it is intriguing whether there are differences with respect to aspects of legitimation concerning

actions against global climate change from the perspective of other “small states”.

Third, in the particular case of Costa Rica, the present study encourages further research and

attention to trends and tendencies on environmental and social vulnerability for future

sustainable strategies. On the one hand, the antagonistic trend affecting hydroelectricity, the

227

main renewable energy source of the country, brings into question the effectiveness of the

recommended plan of the ICE towards 2021 based on the expansion of larger hydroelectric

projects like Reventazón and Diquís, as well as several smaller hydroelectric plants. In the

future, a potential reduction from hydroelectricity in national energy projections would make it

difficult to achieve carbon neutrality by the year 2021.

In this scenario, the role of alternative renewable sources is and becomes relevant, but also

attention to non-conventional fossil fuels like natural gas, as it was evidenced in the competing

projections contrasted in the ICE’s electricity expansion plan (2014-2034). Concerning

alternative renewable sources, it might be interesting to explore the implications for the

institutional regulatory framework and future energy plans of distributed electricity generation,

speeding the growth of (non-generic) alternative renewable sources. Although the organization

of the electricity sector in Costa Rica remained highly centralized and regulated, among experts,

more decentralized or distributed energy systems start to be considered the headland of a new

emerging paradigm for renewable energies such as solar photovoltaic.

In relation to fossil fuels, recent attention to prospects of fossil fuels, over the last few years, has

received low public enthusiasm concerning the carbon neutrality goal in Costa Rica.

Furthermore, the promise of a “carbon neutral nation” became unlikely since the energy

planning sector and politicians started to promote natural gas prospects during 2013. Besides

environmental concerns and legitimation problems associated with electricity generation from

natural gas, this scenario also has several drawbacks from an efficiency view point.

Experts and officials at planning departments refer to the lower consumption of natural gas in

Latin America in comparison to Asia. For this reason, the national refinery (i.e. RECOPE) has

to enter in a deal for natural gas prospects in Costa Rica to start an industry for electricity

generation and initiate its penetration at larger scales. Moreover, as long as the natural gas

resource is imported, as in the case of conventional fossil fuels, the country remains vulnerable

to price fluctuations or supply limits.

The current research left the study of the natural gas projections and its implications to future

investigation. Nonetheless, an important remark on future trends is derived from the awareness

of natural gas prospects. The analyses of the expansion routes (2014-2034) compare the

hydroelectricity based-route with one route that incorporates generic alternative renewable

sources, and another one that introduces natural gas projections. In their analyses, neither the

projected electricity demand, nor the estimated present cost (i.e. including environmental

criteria) between the different routes is varying considerably. Consequently, the aspects that

might influence decisions for future scenarios, in the energy transition towards carbon

neutrality, are in the end more political rather than just technical.

228

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Laws

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1977

Law No. 7200. Law Authorizing Autonomous or Parallel Electricity Generation (Ley que

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1992

Law No. 7447. Law Regulating the Rational Use of Energy (Ley Reguladora del Uso Racional

de la Energía). Year: 1994

Law No. 7399. Law of Hydrocarbons (Ley de Hidrocarburos). Year: 1994

Law No. 7508. Reform to the Law Authorizing Autonomous or Parallel Electricity Generation

or Chapter II) (Reforma de la Ley que Autoriza la Generacion Electrica Autonoma o

Paralela, Capítulo 2). Year: 1995

Law No. 7554. Environmental Law (Ley Orgánica del Ambiente) Year: 1995

Law No. 7593. Authority of Public Services (Ley de la Autoridad Reguladora de los Servicios

Publicos). Year: 1996

Law No. 7575. Forestry Law (Ley Forestal) Year: 1969, 1996

Law No. 7789. Establishes the regional public service company of Heredia province

(Transformacion de la ESPH) Year: 1998

Law No. 7788. Law on Biodiversity (Ley de Biodiversidad). Year: 1998

Law No. 7848. Framework Treaty of the Central American Electricity Market (Aprobación del

Tratado del Mercado Electrico de America Central y su Protocolo). Year: 1998

Law No. 8114. Tax simplification and efficiency law (Ley de simplificación y eficiencia

tributarias). Year: 2001

Law No. 8345. Participation of Rural Electrification Cooperatives and Municipal Public

Service Businesses in National Development (Participación de las cooperativas de

241

electrificación rural y de las empresas de servicios públicos municipales en el desarrollo

nacional). Year: 2003

Law No. 8660. Strengthening and Modernization of the Public Entities of the

Telecommunications Sector (Ley de Fortalecimiento y Modernización de las Entidades

Públicas del Sector Telecomunicaciones). Year: 2008

Renewable Energy Law (Erneuerbare-Energien-Gesetz, EEG). Year: 2000, 2004, 2009, 2012,

2014

Law proposals

File No.16949. Ley Marco de Concesión de Aguas para la Generación de Energía

Hidroeléctrica. Year: 2008

File No. 17666. Ley General de Electricidad. Year: 2009

File No. 17812. Ley General de Electricidad. Year: 2010

File No. 18093. Ley de Contingencia Eléctrica. Year: 2011

242

Interviews

Aldo Sebianne. Current Institution: Chief Wind Plant Valle Central - National Company of

Energy and Lighting (CNFL)

Alexandra Arias. Current Institution: Coordinator Distributed Electricity Generation Program – the Costa Rican Electricity Institute (ICE)

Álvaro Ugalde. Current Institution: Environmentalist. Past: Co-Founder - National Conservation Areas System (SINAC)

Bernhardt Johst. Current Institution: Advisor in Energy Efficiency and CIM expert - Industry Chamber of Costa Rica (CICR)

Boris Westphal. Current Institution: Managing Director - Suntrace, Hamburg

Carlos Meza. Current Institution: Coordinator SESLab - UCR, ITCR; President of the Costa

Rican Solar Energy Association (ACESOLAR)

Carolina Hernández. Current Institution: Engineer Biomass Energy - Costa Rican Electricity

Institute (ICE)

Cindy Torres. Current Institution: Electrochemical and Chemical Energy Center – University of

Costa Rica (UCR)

Dunia Porras. Current Institution: Member of Plenum Commission - National Environmental

Technical Secretariat (SETENA)

Eddie Sánchez. Current Institution: Director Geothermal Resources - Costa Rican Electricity

Institute (ICE)

Enrique Morales. Current Institution: Civil Engineer, Managing Director Central America and the Caribbean - Juwi

Fabio Chaves. Current Institution: Coordinator – ICE Workers Union

Fernando Molina. Current Institution: Center of Geothermal Resource Service - Costa Rican

Electricity Institute (ICE)

Gabriel Rivas-Ducca. Current Institution: Environmentalist - Coecoceiba

Gilberto de la Cruz. Current Institution: Director of the National Center of Electricity Planning -

Costa Rican Electricity Institute (ICE)

Gloria Villa de la Portilla. Current Institution: Director - Energy Sector Directorate (DSE)

Greivin Mayorga. Current Institution: Civil Engineer, Faculty of Civil Engineering -

Universidad de Costa Rica (UCR)

Guillermo Monge. Current Institution: General Director - Public Service Regulation Authority

(ARESEP)

Marco Vinicio. Current Institution: Electricity Services Department - Public Service Regulation

Authority (ARESEP)

Mario Alvarado. Current Institution: Executive Director - Costa Rican Association of Private

energy Producers (ACOPE)

Irene Cañas. Current Institution: Coordinator - 4R Program

243

Jan Borchgrevink. Current Institution: President Nordteco - Nordica de Tecnología & Comercio

S.A.

Jorge Blanco. Current Institution: General Manager Cointica Ltda.; Member of the Costa Rican

Solar Energy Association (ACESOLAR) and the Costa Rica-Germany Commerce and

Industry Chamber (AHK Costa Rica)

José A. Aragón. Current Institution: Director Generation Technologies - Costa Rican Electricity

Institute (ICE)

José María Blanco. Current Institution: Regional Director – BUN-CA Energy Network

Foundation

José María Ureña. Current Institution: Manager - Energías Ureña

José María Villalta. Current Institution: Deputy and presidential candidate - Frente Amplio Party

Katja Frick. Current Institution: Consultant - Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ); President of the Costa Rican Solar Energy Association

(ASESOLAR)

Leiner Vargas. Current Institution: Academic Researcher - International Center for Economic

Policies of Sustainable Development (CINPE- UNA)

Leonardo Merino. Current Institution: Research Coordinator – State of the Nation Program (PEN)

Luis Rodolfo Ajún. Current Institution: Director Solar Energy Projects - Costa Rican Electricity Institute (ICE)

Marielos Alfaro. Current Institution: Deputy - Liberty Movement Party (ML)

Mauricio Álvarez. Current Institution: President - Costa Rican Ecology Federation (FECON)

Mauro Arias. Current Institution: Solar Energy Park Miravalles - Costa Rican Electricity

Institute (ICE)

Mercedes Agüero. Current Institution: Journalist - Grupo Nación S.A.

Miguel Hernández. Current Institution: Economic Engineering Area - Costa Rican Electricity

Institute (ICE)

Misael Mora. Current Institution: Director - Rural Electrification Program (REP)

Pablo Hernán Corredor. Current Institution: Consultant and System Operator - Colombia

Ricardo Garro. Current Institution: Business Developer Central America and the Caribbean - Juwi

Roberto Jiménez. Current Institution: Director Environmental Planning - Costa Rican Electricity Institute (ICE)

Rodrigo Ledezma. Current Institution: Project Manager - Grupo Marshall & Associates

Rolando Madriz. Current Institution: Solar Energy Laboratory – National University of Costa

Rica (UNA), member of the Costa Rican Solar Energy Association (ACESOLAR)

244

Ronald Jiménez. Current Institution: President CODISA Software Corp; President Costa Rican

Association of Large Energy Consumers (ACOGRACE) and member of the Board of

Directors of the Costa Rican Union of Private Enterprise Chambers and Associations (UCCAEP)

Shyam S. Nandwani. Current Institution: Retired professor – National University of Costa Rica (UNA)

Teófilo de la Torre. Current Institution: Executive President - Costa Rican Electricity Institute (ICE)

Thomas Fees. Current Institution: Manager Inti-Tech Solar Energy Systems

Vanessa Castro. Current Institution: Chief Department Project Engineering - National Company

of Energy and Lighting (CNFL)

245

Newspapers

La Nación

21.05.2000. “ICE retoma Boruca” La Nación

21.07.2000. “La Angostura prende máquinas”

30.07.2000. “ICE al vaivén de los políticos”

01.08.2000. “Energía privada cuesta cara”

06.08.2000. “Diversidad en costos de energía”

31.08.2000. “Impugnan tarifas de generadores”

04.06.2002. “ICE en lío por anular contrato”

20.03.2006. “Aresep valora modificar tarifas”

20.03.2006. “ICE perdería oportunidad de comprar energía a precio bajo”

24.10.2006. “Pacífica marcha contra TLC”

11.12.2007. “ICE garantiza servicio de plantas térmicas rentadas”

11.12.2007. “ICE garantiza servicio de plantas térmicas rentadas”

21.12.2008. “El Diquís sustituye el gran proyecto Boruca”

29.01.2010. “Atraso en obras obliga al ICE a comprar plantas a Grupo Pujol”

14.02.2010. “Litigio por expropiaciones frena y encarece hidroeléctrica Toro III”

14.07.2011. “El Diquís, frente a la jurisprudencia de la Corte IDH”

01.11.2012. “Ilegalidades del Proyecto Hidroeléctrico Diquís”

08.08.2013. “Nueva Ley de Aguas: urgencia nacional”

23.10.2013. “Gobierno desiste de plan para apertura de mercado eléctrico”

29.04.2014. “Proyecto eléctrico Diquís cumple tres años varado”

18.05.2014. “País completará en julio red para intercambio regional de luz”

25.07.2014. “Luis Guillermo Solís extiende moratoria a explotación petrolera hasta el 2021”

10.08.2014. “Sala IV se trae abajo proyecto de ley sobre protección del agua”

246

Other Newspapers

27.02.2007. “Majestuosa manifestación contra el TLC” ANEP

28.02.2007. “Marcha contra el TLC evidenció aislamiento del gobierno” Siempre Verde

16.02.2009. “Gobierno y privados quieren afianzar estafa de electricidad privada” FECON

2009. “La geopolítica de la apertura del mercado de electricidad”. Kioscos Ambientales UCR

19.04.2010. “FIT-ICE contra proyecto ley de electricidad de los Arias”, ANEPtv

29.09.2010. “Empresarios meten presión a proyecto de electricidad de los Arias” Semanario

Universidad

08.06.2011. “Relator de la ONU llama la atención por situación de pueblos indígenas”

Semanarion Universidad

28.03.2012 “Ambientalistas temen que 28 proyectos hidroeléctricos acaben con cuenca del río

San Carlos” Semanario Universidad

08.08.12. “Sectores ven como una provocación del Gobierno convocatoria de ley de

electricidad” Semanario Universidad

10.10.2012. “Referéndum sobre el TLC potenció la participación ciudadana” Noticias UCR

27.06.2013. “What is fracking and why is it controversial?” BBC News

16.01.2013. “Energía geotérmica en Costa Rica” Energías renovadas

22.10.2013. “Comunidades de la zona sur conformarán bloque de oposición a proyectos

hidroeléctricos” Crhoy.com,

01.03.2014. “Bolivia Wants Nuclear Energy, But Brazil and Other Latin American Countries

are Abandoning It”, International Business Times.

10.10.2014. “Ticos exigen $26 millones a Stone Container”. El Financiero

10.10.2014. “Ticos exigen $26 millones a Stone Container”, El Financiero.

06.12.2014. “Actualizarán mapa de áreas indígenas y zonas protegidas de Centroamérica”,

CRHoy

10.06.2015. “PAC y Libertarios replantean posición sobre energía geotérmica”, Semanario

Universidad

247

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249

12 Annex

12.1 Abstract in German and English

Zusammenfassung

Auf der UN-Klimakonferenz auf Bali im Jahr 2007, war Costa Rica das erste Teilnehmerland,

das sich zur Erreichung der Klimaneutralität bis zum Jahr 2021 verpflichtete. Die Klärung der

Forschungsfrage, warum sich Costa Rica für eine beschränkte Nutzung von alternativen

erneuerbaren Energiequellen entschied und statt dessen den Bau größerer Wasserkraftwerke

bevorzugt sowie die zukünftige Nutzung von Erdgas in Aussicht stellt, gibt Aufschluss über

Entscheidungsprozesse zur Energiewende hin zu kohlenstoffarmen und erneuerbaren

Energiesystemen.

Neben dem politischen Interesse den Fall Costa Rica selbst zu verstehen und angesichts der

dortigen Dringlichkeit von Entscheidungen in dem Politikbereich, sind Staaten auf der ganzen

Welt mit ähnlichen energiepolitischen Zielstellungen konfrontiert. Das Konzept der

Pfadabhängigkeit wurde vielfach als Analyserahmen genutzt, um technologische

Veränderungsprozesse zu verstehen. Innerhalb der Debatte zur Energiewende, beschäftigt sich

nur weniger bekannte Literatur mit historischen Analysen, der im Zeitablauf entstandenen

Bedingungen und Muster des Politikfeldes. Die Doktorarbeit analysiert die Mechanismen, die

energiepolitische Entscheidungen für die Ziele Klimaneutralität und die Umstellung der

Energieversorgung auf einhundert Prozent erneuerbare Energien in Costa Rica gelenkt haben.

Insbesondere wird auf Aspekte der Effizienz, der politischen Macht und der

Legitimationsmechanismen eingegangen, die aus der Perspektive unterschiedlicher Akteure und

innerhalb unterschiedlicher Zeiträume analysiert werden (vor 1990, von 1990 bis 2014 und bis

2021). Im Rahmen einer qualitativen Einzelfallstudie werden Methoden der Institutionenanalyse

und Process-Tracing angewandt. Die Instrumente zur Datenerhebung beinhalteten Interviews,

teilnehmende Beobachtungen und Dokumentenanalyse.

Die Forschungsergebnisse deuten darauf hin, dass Pfadabhängigkeit bei energiepolitischen

Entscheidungen in Costa Rica eine Rolle spielt. Die historische Analyse deckt die Existenz von

systematischen selbstverstärkenden Mechanismen innerhalb der Entscheidungsprozesse

beteiligter Akteure auf, die eine Priorisierung von Wasserkraftwerken bewirken. Die treibenden

Faktoren, die diesen Pfad verstärkten und den Ausbau alternativer erneuerbaren Energien

verhinderten, waren auf der Ebene der politischen Entscheidungsträger: a) Effekte des globalen

Klimawandels, b) Effizienz der Stromversorgungssicherheit, c) gesamtgesellschaftlicher

Nutzen; auf der Ebene der Investoren: d) Koordinierungseffekte, e) Lerneffekte, f)

Größenvorteile. Die Mechanismen wurden auf beiden Ebenen verstärkt durch g) das Erstarken

250

von privatwirtschaftlichen Akteuren und h) das Werben mit dem gesamtgesellschaftlichen

Nutzen in der Bevölkerung. Unterdessen wurden gegensätzliche Kräfte gefunden in Bezug auf

1) die Unsicherheit hinsichtlich externer klimatischer Schocks, 2) das Erstarken der

Zivilgesellschaft und 3) fehlende Legitimation auf lokaler Ebene. Diese Mechanismen könnten

die Reproduktion des Wasserkraftpfads umkehren und möglicherweise einen neuen Pfad

alternativer erneuerbarer Energiequellen schaffen.

251

Abstract

During the Bali United Nations’ Climate Change Conference, in December 2007, Costa Rica

became the first nation declaring carbon neutrality to be achieved by the year 2021. By

exploring why Costa Rica chose a limited utilization of alternative renewable sources, whereas

giving priority to new larger hydroelectric projects and natural gas prospects in future scenarios,

I intend to shed light, in this research, on the decision-making processes in energy transition

towards low carbon and renewable energy systems.

Leaving aside political interests to comprehend the case in itself and the relevance of timing for

policy decisions, countries all over the world face similar energy-related goals. The notion of

path dependency has been widely used, as a framework, to understand technological

trajectories. However, within energy transition debates, less-known literature deals with

historical analyses of conditions and patterns unfolding over time. This thesis analyzes the

mechanisms driving decisions regarding energy options, in Costa Rica, towards carbon neutral

and 100% renewable energy goals, through the combination of path dependency and

governance approaches. Specifically, I account for aspects of efficiency, political power and

legitimation mechanisms, analyzed from different actors’ viewpoints and in different time

periods (before 1990, from 1990 to 2014 and towards 2021). As a qualitative within-case

analysis, I rely on methods of institutional analysis and process tracing. The information

compilation instruments included interviews, participatory observations and document analyses.

My research indicates that, in Costa Rica, path dependency plays a role in energy decisions. The

historical analysis detected the presence of systemic self-reinforcing mechanisms in actors’

choices that upholds the preeminence of dams over time. In this regard, at systemic levels, the

drivers that reinforced this path and, limit the progress of alternative renewable sources in

policy decisions, were: a) global climate change effects, b) reliable electricity effects and c)

national welfare effects; at investors’ individual level, decision drivers were: d) coordination

effects, e) learning effects and f) scale economies. Those drivers, at both levels, were also

enhanced by g) the empowerment of private actors, and h) the communication of national

welfare. Meanwhile, contradicting forces were found in 1) the uncertainty in decisions from

external climatic shocks, 2) community empowerment, and 3) communication of local welfare.

These mechanisms might reverse the reproduction of the hydroelectric course, possibly creating

a new path for alternative renewable sources.

252

12.2 List of Publications Related to this Dissertation

Potencial y limitaciones de la economía verde. Ambientico No. 222, Artículo 2, Pp. 10-13, 2012

With Hein, Wolfgang and Holstenkamp, Lars. Gobernanza global y evolución de las energías

renovables en el sur: Objetivos políticos y estructuras de gobernanza. Letras Verdes 4, 8, 12-14,

2011

Costa Rica: una agenda ambiental más allá de carbono neutro. Iberoamericana 38, p.169-172,

2010

12.3 Interviewees Data

Annex Table 1. Interviews to the planning sector

Type of actor Interview Period184 Type of project and energy source

I Phase

II Phase

III Phase

IV Phase SOL WIN GEO HYD BIO MIX

Planning sector

Interview 3H Date and Place: 06.08.13 San José. √ √ √ √

Interview 4E Date and Place: 07.08.13 San José. √ √ √ √

Interview 4L Data and place: 08.08.13 San José. √ √ √

Interview 5E Date and Place: 02.10. San José. √ √ √ √

Interview 2F Date and Place: 04.10.13 San José. √ √ √

Interview 3F Date and Place: 03.10.13 San José. √ √ √

Interview 3C Date and Place: 17.10.13 San José. √ √ √

Interview 3H Date and Place: 14.01.15 San José. √ √

184 Phase I starts from 1950-1979, Phase II from 1980-1999, Phase III from 2000-2014 and Phase IV towards Carbon Neutrality in 2021.

253

Annex Table 2. Interviews to project developers (public)

Type of actor Interview Period Type of project and energy source

I Phase

II Phase

III Phase


Project developer

(public)

Interview 4C Date and Place: 12.08.13 San José. √ √ √ √

Interview 2D Date and Place: 29.08.13

Guanacaste √ √ √ √ √

Interview 5D Date and Place: 08.10.13 San José. √ √ √ √

Interview 1Q Date and Place: 03.10.13 San José. √ √ √ √

Interview 1P Date and Place: 27.08.2013 San

José √ √ √

Interview 5H Date and place: 06.08.13 San José. √ √ √

Interview 3J Date and place: 30.08.13

Guanacaste. √ √ √

Interview 2A Date and Place: 01.10.13 San José. √ √ √

Interview 1B Date and Place: 16.10.13 Cartago. √ √ √

Interview 5Q Date and Place: 12.08.13 San José. √ √ √

Annex Table 3. Interviews to project developers (private)


I Phase

II Phase

III Phase


Project developer (private)

Interview 5M Date and Place: 27.09. San José. √ √ √ √ √

Interview 1G Date and Place: 22.10.13 San José. √ √ √ √ √

Interview 2H Date and Place: 13.09.13 San José. √ √ √ √ √

Interview 5N Date and place: 23.08.13 Alajuela. √ √ √ √

Interview 3L Date and Place: 01.10.13 San José. √ √ √ √

Interview 5I Date and Place: 01.10.13 San José. √ √ √ √

Interview 3P Date and Place: 28.08.14

Germany.

√ √ √

254

Annex Table 4. Interviews to experts


I Phase

II Phase

III Phase

IV Phase

SOL

WIN GEO HYD BIO MIX

Expert (related

industrial clusters: agri-

business, electronic)

Interview 1F Date and place: 09.08.13 San

José.

√ √ √ √

Interview 3A Date and Place: 22.08.13

Heredia.

√ √ √ √

Interview 3N Date and place: 05.08.13

Heredia.

√ √ √ √ √

Interview 4H Date and Place: 26.08.13 San

José.

√ √ √

Interview 2L Date and place: 05.09.13 San

José.

√ √ √

Interview 3H Date and Place: 05.09.13 San

José.

√ √ √ √

Interview 5B Date and Place: 20.09.13 Skype

Italy.

√ √ √ √

Interview 1M Data and Place: 20.09.13 Berlin.

√ √ √

Interview 2C Date and Place: 07.10.2013 San

√ √ √ √ √ √

255

Annex Table 5. Interviews to politicians, organizations/associations, clusters, and media

Type of actor Interview

Period Type of project and energy source

I Phase II

Phase III

Phase IV

Phase SOL WIN GEO HYD BIO MIX

Politicians

Interview 4N Date and Place: 04.09.13 San José. √ √ √ √ √ √

Interview 1J Date and Place: 01.10.13 San José. √ √ √ √ √

Interview 1I Date and Place: 23.10.13 √ √ √

Organizations / Associations

(Environmental, Producers/Users

Association, Chamber/Union,

International Cooperation)

Interview 4G Date and Place: 21.08.13 San José. √ √ √ √

Interview 1D Date and Place: 07.10.2013 San

José. √ √ √ √

Interview 4H Date and Place: 19.09.13 San José. √ √ √ √

Interview 3E Date and Place: 26.09.13 San José. √ √ √ 1st 2nd 4th 5th 3rd √

Interview 2J Date and Place: 08.10.13 San José. √ √ √

Interview 5G Date and Place: 15.10.13 San José. √ √ √ √ √

Interview 4A Date and Place: 27.09.13 San José. √ √ √ √ √

Interview 2I Date and Place: 27.09.13 San José. √ √ √

Related clusters (industrial clusters:

electronic) Interview 2M

Date and Place: 16.09.13 San José. √ √ √

The media Interview 4Q Date and Place: 20.09.13 San José. √ √ √

256

12.4 List of Events for Participatory Observation

Annex Table 6. Forums and seminars attended

Event Panelists Resume

Forum: National

Forum on Clean

Energy "Jorge Manuel

Dengo". San José,

02.09.2013.

Organizer:

presidential candidate

Johnny Araya,

political party (PLN)

Dr.Pablo Hernán Corredor

(Consultant, Colombia); Dr. Jorge

Blanco (planning sector CR); Ing.

Salvador Lopez (ICE); Ing. Civil Mario

Alvarado (ACOPE); Dr.Christian

Nicolai Orellana (Consultant, Chile);

Dr. Carlos Srek (Consultant

Argentina); Dr.Juan Carlos Villa

(Consultant Mexico); Ing.Rolando

Araya Monge (Consultant, CR);

Ing.José Bernardo Sandoval

(Consultant, CR); Ing. Julio Calvo

(Expert, TEC); Dr.Leiner Vargas

(Expert UNA/PLN); Ing.Johnny Araya

(Candidate PLN)

L: Competitiveness, equity & poverty

P: Politicians, ICE, MINAE, ACOPE and experts

(mainly engineers)

E: PLN SXXI electricity price and reduce oil use

F: Low demand produces a surplus, then less oil is

needed. Renewable energies like solar and wind

power need (technical) regulation

Renewable energies: the present is the Diquís Dam

& natural gas prospections, the future is solar

energy.

Seminar: 1st Seminar on Development and

Exploitation of Solar Photovoltaic Energy in Costa Rica. San José,

01.10.2013. Organizer: the Costa Rican Association of Private Energy Producers

(ACOPE)

Ing. Mario Alvrarado (ACOPE); Student MSc. Toni Weigl (ACESOLAR); Ing. Ricardo Garro (Juwi); Ing. Hugo Pereira (3TIER); Msc. Alexandra Arias (ICE); Ing. Max Fernandez (4E Program GIZ); MSc. Gina Carvajal & Geilyn Aguilar (ARECA Project, CABEI); Raquel Salazar (BatallaLaw Firm); Ing. Mauricio Solano (Trama TecnoAmbiental); Adrián Bellavita (ENEL); Ing. Luis Ajún (ICE)

L: Ambiguous regulation P: Between public institute (Service Departments at the ICE) and private business (at utility and user level) E: Regulatory instruments, solar cost fall 45% last year, efficiency. Profitability: area (m2), resource (kWh/m2), consumption (kWh/m2), price ($/kWh) and technology ($/Wh) F: Substitute thermal production/day (100%=600MW=85MW per year) and complement Arenal dam- thermal back-up/night

Forum: 2nd Annual Forum on Prospects for LNG and

Natural Gas in Central America. San José,

02.10.2013. Organizer: Institute of the Americas

(IAS)

Jeremy M. Martin (Energy Program IAS); René Castro (Ministry of Environment, CR); Vicente Prescott (Energy Secretary, Panamá); Ariel Yepez (Senior Economist, WB); Ignasi Nieto-Magaldi (Consultant, IDB); Teófilo de la Torre (President, ICE); Ada Georgina Barrientos de Flores (Director Electricity Market, El Salvador); Gerardo Salgado (Director National Electricity Company, Honduras); Eduardo Cuevas (Manager, IFC-WB); Roberto Dobles (Director C-FELA)

L: Substitute oil, back-up for intermittent renewable energies P: Politicians, the ICE, Central American directors & banking sector (boom in North America). E: Emissions, benefits & price attractive, diversification F: The electricity sector is a catalyst in terms of scale, rather tan the transport sector which cannot do it in short term (CR electricity binary system: large hydro & oil)

257

12.5 Questionnaire for Interviews

General Introduction: Doctoral research project to investigate energy transformation processes

in Costa Rica. Research interest: To study different energy pathways, important actors, and relevant decisions taken within the electricity trajectory of Costa Rica. To analyze changes in

different phases: past (origins of the projects/sector), present (current situation or new projects)

and have insights about future perspectives.

Section I Changing context (critical junctures)

1. According to your knowledge/experience, could you briefly describe the major or critical

changes in the energy sector in the past 20/30 years? (open question)

1.1. Which alternative technologies emerged or started being used?

1.2. And which sources did not emerge? Why?

Section II Origins of project / business / sector

2. In the past, did your organization experienced decision situations in which different

alternatives of renewable sources were evaluated or compared (also ask if there is any

project related documentation)?

3. What was your professional/business position within the organization and what activities do

you carry out during that period?

Section III Criteria or reasons for the selection of energy sources (mechanism in the past)

4. In such decision situation(s) in the past, what was the decision criterion about different

alternative renewable sources/technologies?

(Power)

5. Were all the involved parts agreed (departments/members from your organization) on the

decision? Or there were some struggles?

6. Who support/ally / confront or opposed (national groups/organizations/persons)?

7. Did your project/organization have any international links or mainly a domestic

perspective?

8. Were such projects/alternative renewable sources considered relevant by any political

party/politician/member of the cabinet? (power claim and legitimation claim)

(Efficiency)

9. Were financial aspects (cost and/or benefits, return, interest rate) decisive criteria?

10. Which national or/and international institutions financed your project/organization?

Conditions?

258

11. From all the alternative renewable sources available in Costa Rica (e.g. geothermal, wind,

biomass and solar) which technologies did you consider cheaper or more expensive?

12. What was the level of information from your organization about various options?

(Legitimation)

13. Did you believe some options (e.g. solar energy) have other particular advantages? What

advantages? (legitimation claim)

14. Were you involved with other groups –also beyond your work- in actions that support the

development of the technology you use? (legitimation claim)

15. What was the philosophy of your organization at that time? (open question)

(Functional)

16. Did you believe that the national energy system affronted a particular urgent risk? Why?

17. Did you base your decision/arguments in expectations of a growing energy demand? Why?

18. Did you base your decision/arguments in expectations of oil prices/peak/shocks or financial

crisis? Why? (functional claim/efficiency claim)

19. Did you base your decision/arguments in terms of Climate Change? Why? Or any other

environmental pressure? (functional claim/legitimation claim)

Section IV Criteria or reasons to change/maintain energy sources (present mechanism)

20. Would you agree with the affirmation that “nowadays there is a new boom of renewable

energy sources”? Why? (open question)

21. Have your organization witnessed new decision situations in which different alternatives of

renewable sources are evaluated or compared (also ask if there is any project related

documentation)?

22. In such decision situation(s) in the past, what was the decision criterion about different

alternative renewable sources/technologies?

(Power) (Efficiency) (Legitimation) (Functional)

Section V Towards carbon neutrality 2021 (future perspectives)

23. Can you mention government policies that support the technologies you use (e.g. law,

incentive, program, etc)?

24. What do you think is the goal of the energy policy nowadays? Has this changed over time?

25. According to your knowledge and experience, which sources might lose importance or are

considered without future in the national energy system towards CN 2021? Why? (open

question).